The Budget wish-list of the real estate sector, particularly from the distressed residential segment, runs long. They would like more ease of doing business, a more flexible definition of affordable housing, and home loans at reduced interest rates. Industry bodies such as CREDAI and the National Real Estate Development Council (NAREDCO) also think a one-time restructuring of loans would help. "Liquidity shortage continues to cause distress in real estate. Hence, a one-time restructuring scheme with moratorium on principal and interest of two years is immediately needed," CREDAI stated.
In 2019, RBI had decided to permit a one-time restructuring of existing loans that were in default, without an asset classification downgrade. NAREDCO pointed out that the benefit of the circular is not available to the real estate sector. "As a result, the restructuring or rollover of the loans triggers the provisions related to NPA. Due to the downturn in the market and also failures of several big NBFCs, developers are facing acute liquidity shortage. We recommend that the banks and financial Institutions be given discretion to one-time restructuring and/or rollover of their existing loans on the lines of loans to other sectors," the body suggested. NAREDCO also wants interest rates on home loans to be reduced to 7 per cent an annum - that could revive some of the demand and help the industry reduce its inventory of unsold apartments.
J.C. Sharma, Vice Chairman and Managing Director of SOBHA Limited wanted the definition of affordable housing to be amended. Currently, a flat with carpet area up to 90 square metres in non-metropolitan areas and 60 square metres in metropolitan cities are categorised as affordable. They cannot cost upwards of Rs 45 lakh. "While the Government has been bullish about the affordable housing segment, the value limit of affordable housing at Rs. 45 lakh is an obstacle for this segment. In cities such as Bengaluru, the limit of Rs. 45 lakh is unrealistic due to variable land prices within the city," he said. The value limit should be Rs 75 lakh, he suggested. Affordable housing comes with reduced GST rates and benefits of tax exemption for such projects.
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