Budget 2017: Infrastructure status to affordable housing to boost projects

Dvelopers of affordable housing can access the external commercial borrowing and EPFO funds

The infrastructure status granted to affordable housing in the Union Budget projects is expected to help the developers of these projects access more funds at lower costs and increase supply of budget housing.

 

"Developers of affordable housing can access the external commercial borrowing. EPFO funds can come into this segment and insurance companies can invest in these projects since they are classified as infrastructure,” said HDFC chairman Deepak Parekh to a television channel.

 

Joe Varghese, managing director at Colliers International, said: "Granting infrastructure status to affordable housing will provide a boost in volume of construction activity across the country. A good boost to the construction industry that was struggling with reduced number of product launches in real estate in the last couple of years”.

 

Ravi Ahuja, executive director, Office Services & Investment Sales at Colliers International said that the announcement redefining 'affordable housing' was very much required as they expect the government to make a deliberate decision on defining affordable housing, keeping in view the differentiation between Tier one, two and three locations/cities across the Indian geographies”.

 

Varghese said announcements like capital gains on joint developers agreements to be taxed only at the product launch, one year tax exemption from notional rental income from unsold inventory and reduction of long term capital gains tax period from three to two years provide respite to investors/developers of real estate.

 

"This helps especially those holding real estate inventory/stock. This is a great move. It provides tax relief to developers in the residential sector where the sales have significantly dropped post demonetisation move”, he said.