For rental housing, the proposed model tenancy law has the potential to revitalise India’s rental market: Balaji Rao

Commercial real estate may expect a boost as Foreign Portfolio Investors (‘FPI’s) will be permitted to subscribe to listed debt securities issued by REITs – a move that will help develop the much-needed depth in the REIT market as well as encourage an inflow of foreign capital.

Jul 05, 2019 02:07 IST India Infoline News Service

This budget has been a reflection of the government’s commitment to supporting affordable housing, by reaffirming its goal of “Housing for All” by 2022. The benefits to the sector can be expected to translate into three broad categories:

For rental housing, the proposed model tenancy law has the potential to revitalise India’s rental market. A new rental law could also aid in liquidating piled-up inventory by encouraging the purchase of a second house, for rental income.

Commercial real estate may expect a boost as Foreign Portfolio Investors (‘FPI’s) will be permitted to subscribe to listed debt securities issued by REITs – a move that will help develop the much needed depth in the REIT market as well as encourage an inflow of foreign capital.

With respect to affordable housing, an extremely laudable step by the government has been the alignment of definitions of ‘affordable housing’ under the GST and Income Tax Acts, which will go a long way towards streamlining processes and increase ease of doing business.

Further, in line with the spirit of the last budget, the government has sought to improve affordability by increasing the tax break offered on interest paid on housing loans. Going forward, it is proposed that an additional deduction of Rs 1.50 lakhs be allowed on interest paid on loans for houses of stamp duty value of Rs 45 lakh or less, encouraging the middle and low income segments of the real estate market. The budget also brings a welcome structural change, in proposing to bring Housing Finance Companies (‘HFC’) under the aegis of the RBI

By mooting to release land parcels held by Public Sector Undertakings (‘PSUs’) for affordable housing developments. By way of this budget, the government has affirmed their commitment to economic growth through supporting the working class and strengthening financial systems, which in turn, should conceivably lead to a revival of the real estate markets.

- Balaji Rao, Managing Partner – Real Estate, Axis Asset Management Company

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