Budget 2021: Impacts on Real Estate Sector

Introduction
Over the years, real estate prices have developed colossally, and most of the credit gets redirected towards development in the corporate sector and trade. According to IBEF ( India Brand Equity Foundation ) the construction industry ranks third among the 14 major sectors in terms of direct, indirect, and induced effects in all sectors of the economy.

The real estate market has confronted a few interruptions in the previous few years. Demonetization pushed request off the bluff in 2016. The sector had scarcely recuperated when the GST rollout and presentation of the Real Estate Regulation Act kicked in. In March 2020, real estate developers were perched on inventory that would take around 15 quarters to clear. Be that as it may, changes to the 2020 budget gave a push to the real estate sector which saw some development regardless of the stoppage brought about by the pandemic.

How the Pandemic affected the real estate sector in India?
In 2020 the whole world saw a global pandemic that caused a significant stir in a ton of sectors. Although the real estate market was one of the sectors to endure the greatest hit, with workers and migrants emptying their homes and returning to their hometowns, it shockingly managed to build its reputation back again. During the pandemic with everybody in lockdown caused individuals to understand the significance of space and privacy. With new norms like working and studying from home, families were keeping watch for bigger space.

Government’s support towards affordable housing.
The changes made in the 2020 Financial budget, for example, ‘Housing for all’ allowed the public a chance to afford a home.

Home loan rates saw a major dip in prices as they fell to below 7% which is the lowest it has been in the past two decades. Houses started selling at a greater pace.

The 2021 Financial Budget

On 01 February 2021, the financial budget was introduced by the Finance Minister-Mrs.Nirmala Sitharaman in which she brought about how the budget is centered around aiding the Health sector and construction sector generally. The budget this year has been transparent and has been able to provide information concerning where the cash is actually going. This year the Ministry of Housing and Urban Affairs has been conceded Rs 54,581 crore in the Budget 2021.

With reference to the previous year’s budget for real estate, certain revisions like the deduction of Rs. 1.5 lakhs on interests toward affordable housing loans has been extended to 31 March 2022. At first, in 2019 the government gave an additional deduction of interest, adding up to Rs 1.5 lakh, for a credit taken to buy an affordable house.

Likewise, to promote Affordable Rental Housing for migrants, the Finance Minister has proposed to permit a tax exemption for notified Affordable Rental Housing projects.

Debt financing of InVITs (Infrastructure Investment Trusts) and REITs (Real Estate Investment Trusts) by foreign portfolio financial backers will be empowered by amendments in relevant legislations. This will expand funds for the Infrastructure and Real Estate sectors.

An Asset Reconstruction Company and Asset Management Company would be set up to take over existing stressed assets of public sector banks and then dispose of them to Alternate Investment Funds for eventual value realization.

Infrastructure is a sector that requires long term debt financing. 1016km of the metro and RRTS are as yet under development in more than 27 cities. The government will present two new innovations i.e., MetroLite and MetroNeo, to give Metro rail frameworks at a lesser expense to Tier 2 cities and peripheral areas of Tier 1 cities.

The highlights of the budget with reference to real estate
1. The augmentation of the additional deduction on affordable housing loans up till 31 March 2022.
2. Affordable Rental Housing for Migrant workers and laborers.
3. Expansion in safe harbor limit for the primary sale of residential units.
4. Simple availability for REITs and InVITs.
5. Framework to begin booming especially, concerning the Metro.
6. Focused on Asset Resolution.

A Budget for Every Man
This year’s budget is altogether different as the government has been straightforward about the expenses of consumption towards building up the country. The government has given a strong base or developing infrastructure to take the nation ahead. With everything taken into account, this budget has something in it for both the homebuyer and the developer.