CREDAI affirms revival of GDP growth by 1-1.5% if impetus is given to meet housing shortage by creating and facilitating home ownership

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FIX HOUSING FAST: Home ownership is the key to a thriving India

 

CREDAI affirms revival of GDP growth by 1-1.5% if impetus is given to meet housing shortage by creating and facilitating home ownership

 

~ Twin agenda to create mass affordable housing and convert slums into organised legal occupancy ~

 

Mumbai, June 26, 2009: In the countdown to the Union Budget, the second biggest industry in India represented by CREDAI has put forth recommendations for forthcoming year on the twin themes of affordable housing and slum redevelopment which would fuel the largest common Indian dream – own a home.

 

The recommendations put forth by CREDAI, the widest consensus of real estate developers in India, are very much aligned to the announced objectives of the Central Government on using infrastructure development to revive the economy. The real estate industry believes that it has the potential to play the role of the steam engine basis the fact that real estate sector alone can add to the GDP bottomline by 1-1.5% if efforts are made to reduce the shortage of urban housing while moving towards a slum free urban India. The expectations recently shared in a pre-budget memorandum to the Govt of India are also derived from the prioritisation of affordable housing aforementioned in the Deepak Parekh Task Force Report constituted by the Ministry of Urban Development and Poverty Alleviation.

 

Recommendation I: Affordable Mass housing Fiscal incentives for encouraging ‘Affordable Mass Housing’ in 300 – 600 sq.ft and up to 1000 sq.ft by providing subsidy in interest payable by home buyer   The significance The Eleventh Five Year plan has estimated the urban housing shortage of 24.7 million units with 99% of the shortage pertaining to Economically Weaker Sections (EWS) and Lower Income Group (LIG). Home ownership is critical for this segment not only for economic reasons but also for the health of the nation from a social perspective in terms of stability, law and order and education and employment

Recommendation II: Slum Redevelopment Exemption of direct and indirect taxes to boost ‘Slum Redevelopment’ initiative   The significance The Hon’ble President of India in her address on 4th June 09 has announced the intent of the government to make urban India slum free by five years. Around 80 million urban poor live in sub-standard or unsafe housing conditions under the abuse and continuous threat of displacement. From the slum dwellers perspective there is an additional tax burdens puts dampners. From a developer’s perspective in the context of slum redevelopment, arrangement for pre-sale financing is difficult because of the perceived risk factors. From the government’s perspective land is scarce, and with the migrant population increasing every year, redevelopment is critical to the orderly development of cities. The improper of utilisation of land is uneconomical and from the government’s perspective.

Recommendation III: Easing norms on self occupies residential house property   ·        Increasing deduction on interest paid on Self Occupied Residential House Property, currently restricted to Rupees One lakh fifty thousand per annum   o The entire interest on funds borrowed for acquisition/ construction of self occupied residential house property, deduction to be allowed in the affordable housing category   o In other developments outside the affordable housing projects, deduction up to Rs. 3 lakhs per annum to be allowed and up to Rs 5 lakhs per annum to be allowed in Tier 1 cities   ·        Deduction U/S 80 C for repayment of principal portion of housing loan for self occupied residential house property   o In addition to the present composite deduction up to Rs. 1 lakh, a separate limit of up to Rs. 2 lakh deduction may be permitted for repayment of principal portion of home loan for self occupied residential house property to encourage affordable housing sector and the middle class to have more disposable income   The significance:   This impetus is required keeping in mind that amounts were fixed six years ago and real estate prices have catapulted since then. Beside the deductions, impetus is required to be given to the large middle class in the affordable housing segment to increase their net disposable income as it would have a direct impact on the consumption and hence the economy

Recommendation IV: Incentives for Senior Citizens   ·        Incentive is required to be provided to senior citizens to purchase flats for themselves and also to the children of senior citizen who purchase residential unit for their parents.   o 100% interest deduction on home loan taken by the senior citizen or by their children if he /she opts to buy a second home in the joint name with his/her parents who are above 55 years old.   o No capital gains should be payable by the senior citizens / their children on sale of their residential units The significance:   This would be a special gesture towards the senior citizens of the country. The impetus is required keeping in mind that our country needs to build a society in which every family has a stake defined as home, which is crucial for a democratic country.

Mr. Santosh Kumar Rungta, President – CREDAI, commented “CREDAI appeals to the government on the impetus to create and facilitate affordable housing – these are linked to the needs of the common man. The interest of developers is not only to prosper but build and serve the public purpose. We are optimistic that our recommendations to the Central Government will be evaluated with utmost importance and will put ‘affordable housing’ at the centre of public policy”

 

About CREDAI: It is the apex body of the organized real estate developers/builders across India, representing pan-India associations of real estate and housing developers. Since its inception in the year 1999, the association has grown manifold with allegiance from 18 state/city level associations viz. Andhra Pradesh, Chhattisgarh, Delhi-NCR, Goa, Gujarat, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Orissa, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh and West Bengal with over 4000 individual member developers encompassing over 60% of the organized private sector real estate development activity in member states/cities in the country.

 

CREDAI has been instrumental in rallying the cause of the Real Estate sector by presenting the issues and concerns of real estate developers to the Government.

 

For more information log on to – www.credai.com

 

 

For further information please contact Perfect Relations: 24216746/48.

Ankush R. Chavan – 9869785684 / Belinda Dokras - 9820284220

 

Thanks and Regards,

 

Ankush R. Chavan.

Telephone - 022 24216746/48.

Mobile -  09869785684.

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