Relief meant to support India’s entry-level buyers even as industry remains divided
The Indian real estate industry has been experiencing a significant slowdown in recent years. The high property prices, coupled with the economic slowdown, have made it challenging for entry-level buyers to purchase their dream home. However, the government’s recent announcement of relief measures for the real estate sector has brought a ray of hope for these buyers. The move is seen as a much-needed boost to the sector, which has been struggling to attract buyers.
The relief measures announced by the government include a reduction in the Goods and Services Tax (GST) rate on affordable housing from 8% to 1%. The definition of affordable housing has also been expanded, increasing the size limit from 60 square meters to 90 square meters in non-metropolitan cities, and from 90 square meters to 120 square meters in metropolitan cities. This move is expected to attract a large number of buyers, especially in tier 2 and tier 3 cities, where affordable housing projects are in high demand.
Apart from this, the government has also extended the deadline for availing the Credit Linked Subsidy Scheme (CLSS) under the Pradhan Mantri Awas Yojana (PMAY) till March 2021. The scheme offers a subsidy of up to Rs. 2.67 lakh on home loans for first-time homebuyers belonging to the economically weaker section (EWS) and low-income group (LIG) categories. This extension is a much-needed relief for buyers who were unable to take advantage of the scheme due to the COVID-19 pandemic.
The real estate industry has welcomed these measures, and it is expected to have a positive impact on the sector. The reduction in GST rates is likely to make homes more affordable for entry-level buyers, and the extension of CLSS will encourage more people to invest in their dream home. These measures are expected to boost demand in the sector, which has been struggling due to the economic slowdown and the current pandemic.
However, the real estate industry remains divided on the effectiveness of these relief measures. While some believe that these measures are not enough to revive the sector, others are optimistic and believe that it will have a positive impact in the long run. The Confederation of Real Estate Developers Association of India (CREDAI) has welcomed the move and has stated that the measures will give a much-needed impetus to the sector, especially in non-metropolitan cities.
On the other hand, some experts believe that the reduction in GST rates may not have a significant impact as most buyers in the affordable housing segment already enjoy a GST rate of 1%. They also opine that the extension of CLSS may not be enough to boost demand, as the scheme is limited to a specific income group. Moreover, the overall economic slowdown and the current pandemic may still deter buyers from investing in the real estate sector.
Despite the differing opinions, there is no denying that the relief measures announced by the government are a step in the right direction. The focus on affordable housing is commendable, as it addresses the needs of the entry-level buyers. The expansion of the definition of affordable housing will also open up more options for buyers, especially in metropolitan cities where the cost of living is high.
The extension of CLSS is also a welcome move as it will benefit a significant number of buyers. The scheme has already helped many first-time homebuyers fulfill their dream of owning a house, and the extension will allow more people to avail of its benefits. Moreover, the reduction in GST rates and the extension of CLSS will not only benefit buyers but also developers as it will boost demand and encourage more projects in the affordable housing segment.
In conclusion, the relief measures announced by the government are a positive step towards supporting entry-level buyers and reviving the real estate sector. While the industry may remain divided on its effectiveness, there is no doubt that it will provide some much-needed relief to both buyers and developers. It is now up to the stakeholders to work together and make the most of these measures to drive growth in the sector and fulfill the dream of every Indian to own a home.
