More Govt Efforts Needed To Boost Housing

It surely is the right time for the middle class to go for its dream house. But the budgetary initiative _ that increases the income-tax exemption limit on interest payments on housing loans from Rs 75,000 to Rs 1 lakh _ affects only 1 per cent of the Indian population; the income-tax assessees. Housing is a universal need, feel experts, and there is a lot that the government still needs to do to give a real impetus to the housing sector and make housing affordable to the masses, rather than classes.

According to CB Richard Ellis south Asia managing director Anshuman Magazine, the government still needs to deal with three issues in order to increase the housing stock in the country and make housing affordable to more people. These include amending the National Housing Bank Act in order to enable foreclosure of mortgage debt.

 

The Bill has already been placed in Parliament and is likely to be passed in the ongoing session. With the passage of this Bill, people will no longer be scared of renting out their property as disputes over mortgaged property will be resolved faster, rather than getting entangled in the legal rigmarole. In fact, people will start building houses for rent and pay the installment on their housing loans from the rent they earn.

Also, rent control acts in various states need to be amended. But more importantly, says Magazine, the government must allow foreign direct investment in housing, besides allowing other financial instruments in the market that would increase the flow of funds to the builders.

With the provision for foreclosure of mortgage debt, the NPAs will come down drastically. Thus, banks and NBFCs will start lending to private builders, says G P Khungar, a real estate consultant. As of today, builders borrow funds at very high rates of interest. "And once they get access to cheaper funds, they'll pass on some of this benefit to the consumer," he adds.

This is not to say income-tax sops and other initiatives by the government have not given an impetus to housing. According to National Housing Bank chairman P P Vora, with the income-tax exemptions, disbursements have been constantly rising at the rate of around 30 per cent per annum.