Union Budget 2015: Is it a thumbs down for home buyers?

The Modi government that presented its first full-fledged Union Budget 2015 on Saturday has disappointed aspiring home buyers in the country. The aam aadmi was hoping for some big bang reforms in the Budget 2015 that would bring down the sky-high real-estate prices and make it more affordable for his pockets, but it didn’t.

“It still is the same. Home loan will continue to remain expensive so nothing changes for us,” said Swapnesh Pattnaik, a HR professional who had deferred his plan to buy a residential property in Gurgaon in hopes of getting some relief in the budget.

According to real estate players, the budget has fallen short of expectation and did not deliver on many fronts. “It has not provided any direct relief for the common man. It has not increased personal income tax deduction limits, nor has it provided any relief for home loan borrowers,” said Kishor Pate, chairman and managing director of Amit Enterprises Housing Ltd.

He added, “However, the previous budget had already given relief on those fronts, so it was not really likely that this budget would go further”.

Seeing the government’s resolve to provide affordable housing for all, home buyers were hoping the Centre to make rate of interest on home loans more reasonable. “Paying so much interest has serious implications on the family budgets of most middle-class wage earners. It is not surprising that many of them currently shy away from home loans. The budget should bring the interest rate on home loans down to between 7.5%-8.0%,” noted Pate.

Besides, the government also deferred the implementation of Goods & Service Tax for next year, thus delaying its positive impact by a year. “At least this year, the buyers will not be spared from the excessive taxes,” noted industry player.

However, realty developers have hailed the government’s decision to abolish wealth tax and levy a 2% surcharge on the super-rich individuals in the country. Puri explained that the fact that the minimum cap for the tax has been raised to Rs 1 crore from the previous cap from Rs 30 lakh, is a good news for the common man.

“In India, a major share of personal assets is in the form of real estate, particularly in the urban areas, where real estate prices are very high. Effectively, this new measure implies that a lot of urban housing stock is out of the purview of the new Super Rich tax, and this is a relief for the common man. Only houses priced above Rs 1 crore will now be taxable,” Anuj Puri, country head for JLL India.

The budget has neither revised the cost of property registration that every home buyer ends up paying. “The recent hike in ready reckoner rates in Maharashtra has been a sentiment setback for the real estate sector. Stamp duty and registration costs are as high as 6% in most cases, and this needs to be reduced by a few base points to aid consumers”, stated Pate.

Overall, neither have the home buyers nor the real estate players have found the budget to be a real game changer as far as property-buying is concerned.