By Aditya Kushwaha,
CEO & Director, Axis Ecorp.
COVID-19 has thrown some unprecedented challenges for the industry throughout this year. Recently, however, there has been a good spike in the recovery of the real estate sector and demand for home loans has gone up evidently.
Due to the COVID-19 pandemic, the concept of a holiday home or a second home has gained widespread acceptance. With most of the corporate professionals working from home, geography is no longer a constraint. The need for a perfect balance between work and personal life has fuelled the concept of a weekend retreat in a holiday home.
From the investment perspective, second homes in non-metro cities are a relatively safe investment option with higher capital appreciation compared to homes in metros, especially during COVID-19, when alternative options such as mutual funds, shares have seen diminishing returns. These properties can be rented out to home-stays and tourism businesses, a booming market promising an assured and stable source of income to investors.
However, home loans for holiday homes are rarely available. Most of the time banks ignore funding under construction holiday homes especially to those customers who are desperately looking for it. We think, govt. can extend support in creating such policies that will benefit the players as well as people who are willing to spend on holiday homes.
With policy support from the Central Government, the real estate sector is displaying signs of growth, and sales numbers are increasing across cities.
The Finance Minister had announced measures like an additional outlay of around Rs 18,000 crore for PM Awas Yojana. This relief is expected to lift the demand, particularly in the affordable and mid housing segments.
To further speed fast the government vision of ’Housing for All’ and to give an impetus to struggling Real Estate Sector, Industry is hoping that the Government will re-visit the present limit of Rs. 2 Lakhs for Interest on Housing Loan U/s 24(b) of IT Act, and Cap of this Rs 2 Lakhs in Interest would be waived off. It will be instrumental in allowing some tax relief to buyers and providing a much-needed push to the Industry.
Keeping a positive outlook for the upcoming budget, we are hopeful to see relaxation in income tax norms, offer single-window clearance and GST reforms. Additionally, helpful measures like easing out of the liquidity issues that are being currently faced by the sector will boost investment in real estate.
We also hope that the government gives ‘Industry Status’ to the Real Estate sector as a whole including Secondary Housing and Holiday Homes. Currently the same has been conferred only to affordable housing. This is a long-pending demand that is expected to help developers raise funds at lower costs.
More so, the government needs to push the active NBFCs to extend liquidity to the Realty Sector and should declare that the rental income received from any Holiday Home-based / Tourism centric zones would be free from GST, to give further impetus to the holiday homes segment.