Budget 2018: Short-Term Investors Expect Realty To Turn Lucrative

For the past four years, real estate investments have been dwindling, making the sector, which has otherwise been seen as one of the most profit-making avenues, unlucrative. Investors across the country have taken a step back and are now in a wait-and-watch mode. Although the number of end-users buying property has recovered in past few quarters, investors are still looking for sufficient proof that the investment climate is just right. Will the soon-to-be tabled Budget 2018 guarantee this? Here are some areas where investors are looking for clarity:

Pinched by the law

The Real Estate Regulatory Authority (RERA) has come as a blessing for the sector. However, it has brought with it various compliances, expenses and time-taking procedures that have not worked in favour of the interests of prospective homebuyers and developers. In fact, the wait to understand the nuances of the respective state authorities, for their final state-based rules, etc., ate up a lot of time. Therefore, what Budget 2016 gave Indian homebuyers in the form of the Real Estate (Regulation & Development) Act, 2016, Budget 2018 should help ease the resultant lags caused due to it.

The Act did bring about some transparency in the sector, however, much cannot be said about its efficacy as the investors have not ventured in yet. Budget 2018 should make the real estate law more promising.

GST and vagaries

The biggest taxation reform of the decade, the Goods and Services Tax (GST), too, invited both cheer and uproar in the sector, raising a doubt about the process. For a while, experts and financial planners discussed and debated the issues related to GST and investors. The short-term investors again took a backseat clearly deriving that GST is good but the calculations need to be studied so deferring a purchase was the best way to go ahead. Budget 2018 would need to encourage this short-term investor.

The way property prices spiral

Unaffordability has been one of the root causes why real estate seemed to have lost its sheen in the recent past. Budget 2018 should be for the common man and how plans can be reworked to make the property market easier to access. For instance, tax slabs should no longer be a burden on the common man and efforts must be taken to rationalise these slabs.

For homebuyers, income tax exemption limit on repayment of interest of home loan should be hiked to Rs 2.50-3 lakh as this would motivate end-users and investors to enter the property market.

Make under-construction a viable pick

Thanks to the delay in project completion, the uncertainities after demonetisation, the real estate law and the GST, the ready-to-move apartments and other property types have seen maximum inquiries. However, efforts should be in place to make under-construction homes a viable pick, too.