Connect with us

Regulations

National Urban Rental Housing Draft Policy 2017 – Is There Any Relief?

Published

on

It’s been almost three decades since the first National Housing Policy came out in 1988 but there are hardly any changes in the policy which completely ignores those who cannot afford to buy a house, despite of flexible policies, subsidies and tax rebates. The National Urban Rental Housing Policy Draft 2017, which is currently awaiting the Union Cabinet’s approval, is expected to bring some relief to tenants or will it be just another policy without much attention to existing concerns.

There is a huge influx of migrated population in the urban areas and according to the 2007-08 National Sample Survey proportion of migrants is almost 35%. Even though the latest census data on migration is not available, the rural to urban population increased from 10.98 million in 1971 to 21.74 million in 2001. On the other hand, the urban to rural population has only increased from 5.33 million in 1971 to 6.58 million in 2001. The increased population has expanded slum areas in cities, due to lack of affordable rental housing in the cities.

It’s been a while since there has been any major improvement in rental housing at the mass level. The last time it happened was during the pre-independence era where townships were created by mill owners for migrant workers. Since then all policies, such as UPA’s Rajiv Awas Yojana and NDA’s Pradhan Mantri Awas Yojana, are more focused on homeownership rather than rental accommodations. The recent draft policy acknowledges this fact as well, as it stated that the focus of most policies of the government is oriented towards home ownership which will not solve the problem of the housing shortage for Economically Weaker Sections (EWS) and Low Income Groups (LIG) in urban areas. Even in the budget, there are incentives for home ownership by offering a greater tax deduction on interest paid while there are no such incentives to improve the rental market in India. The draft National Urban Rental Housing Policy 2017 attempts to address this concern, however with loopholes and limitations.

The Ministry of Housing and Urban Poverty Alleviation, which has drafted the policy, defines its role as that of a facilitator or enabler. There is hardly any possibility of fiscal and non-fiscal concessions for rental market created by state or through Purchasing Power Parity (PPP) and under Corporate Social Responsibility (CSR).

The draft classifies the rental housing in two categories:

  1. Social Rental Housing Social rental housing for urban poor targets EWS, LIG as well as section defined as ‘tenants by constraint’ that includes urban poor who belong to SC, ST, OBC, migrants, trans-genders and senior citizen.
  2. Market-Driven Rental Housing – Market-driven rental housing includes hostels for students and working men and women, accommodation for the 17.5 million public sector undertakings (PSUs) employees and government departments and private rental housing for everyone else.

The policy doesn’t have any provision neither does it address the issue of homelessness, as the government still considers homelessness as livelihood issue, so any policy related to it comes under the umbrella of National Urban Livelihood Mission instead of including it in the National Urban Rental Housing Policy Draft 2017.

Unlike many schemes by the central government which has budgetary support for construction of homes, the rental housing policy in its current form doesn’t have any central funding. So, the attempt to formulate a rental policy is undoubtedly a great move, however, the biased approach towards schemes or policies that promote home ownership is still evident. The policy ignores any fiscal responsibility by simply stating that housing is state subject and it is the responsibility of state governments to ensure housing for everyone. The only good proposal in the policy is to make some budgetary arrangements for setting up funds for rental vouchers to be distributed on a pilot basis in few selected smart cities. These vouchers will be equivalent to cash and are expected to reduce the rent incurred by urban poor. However, the rental accommodation itself will come from private players who largely control the market rates. The role of central government is limited to intervene only on the demand-side while there is more need to increase the supply of rental housing, where there is no intervention at all. In regards to supply, entire responsibility has been put on the market.

Also Read: RERA Effect On Real Estate Agents

Regulations

373 Maharashtra Cities To Fall Under PMAY Scheme

Published

on

By

The state of Maharashtra has added 232 cities to the existing 142 which makes it 373 cities under the Pradhan Mantri Awas Yojana Scheme (PMAY).

The officials at the housing department feel that this step will aid the government take up more projects under the PMAY scheme.

Sachin Kulkarni, Builder shared his concerns over the lack of coordination between the department in executing PMAY projects. He said, “This is a good sign. However, the PMO’s seriousness in promoting HFA is diluted by the time it reaches the authorities. Apart from collecting application from interested beneficiaries, nothing has moved on the ground in urban centres. I hope that this initiative moves on fast track”.

Maharashtra CM Devendra Fadnavis recently states that the in order to create more housing stock the state’s Slum Rehabilitation Authority scheme be brought under PMAY so that it can receive the subsidy to create more affordable housing. He clearly mentioned that the government intends to create more housing stock and it was taking various initiatives and making policy changes for it.

Also Read- Affordable Housing To Get A Boost With PMAY’s Scope To Be Extended To Private Lands

Continue Reading

Regulations

Real Estate Sector May Fall Under GST What Does It Mean For Buyers?

Published

on

By

One after the other the real estate sector has witnessed massive policy and law changes in its systems. Nonetheless, the tide has not passed yet. The GST council will take up a proposal to bring it under the uniform nationwide levy.

As the industry is still recovering from the RERA Act, the finance minister, Arun Jaitley said that there is a strong case to include real estate in the new indirect tax regime. He said this last week and also mentioned that GST Council will discuss it in November.

At present, the home buyers are paying 12 percent GST on under-construction properties. This percentage includes two taxes which are stamp duty and registration. The rate of which varies in each state but GST will make them uniform.

Santosh Dalvi, KPMG India partner (indirect tax) said, “If the entire real estate is brought under GST, they would have to abolish the stamp duty and we don’t know how the government plans to compensate the states for their loss.”

The stamp duty with registration and GST comes to approximately 18 percent for under construction properties. He further said, “So, it’s important to look at what rate it will be taxed at. We can then look at consumer prices”.

While agreeing, Bipin Sapra, EY partner (indirect tax), added, “It’s going to be a test for the government”.

Developers also pay taxes on raw materials. However, unlike other businesses, they don’t get any tax refunds through input credit. GST taxes every stage of the business activity to better compliance and compensates for it by permitting refunds.

Anuj Puri, Anarock Property Consultants chairman, said “By including real estate under GST, builders can get a fair amount of input credit, helping bring down costs,” He added that it would make homes cheaper for buyers.

According to Sapra, it will depend on the tax rate applicable.

Niranjan Hiranandani, co-founder of Hiranandani Group said, “Real estate under GST ambit means consumers will only have to pay one final tax.” He stated that with the commencement of RERA it brings transparency and GST would reduce the burden in terms of taxes payable while buying the home. He concluded, “Not only will this create positive sentiment but it should also boost actual sales”.

Also Read: Affordable Housing Is The Changing Face Of Indian Real Estate

Continue Reading

Regulations

Home Buyers Will Be Covered Against Builders Who Are Going Bankrupt

Published

on

By

In a move to protect home buyers from builders declaring their bankruptcy, the Insolvency & Bankruptcy Board of India (IBBI) has amended rules which make it necessary for any company to showcase how they have dealt with interests of all stakeholders. This is directed towards companies like Jaypee Infratech and some of the entities of Amrapali Group.

The regulator has informed about the revised rules last week. This will ensure that banks and other creditors do not get away by protecting their interests at the expense of others who are impacted by the action.  Banks are part of the creditors’ committee. They become an important decision-making body after a company is admitted for bankruptcy.

An expert bankruptcy lawyer said, “The change in the rules has plugged a gap as flat buyers are of the view that there is nothing to protect their interests.”

According to the new law that was enacted last year intends to speed up the resolution process in a period of 180 days, with a possible extension of 90 days. This will be done by appointing insolvency resolution professionals who will take charge of the company’s operations and prepare a plan. As per the law, an information memorandum will be finalized if the creditor’s committee is willing to take applications from other interested companies to take over the company.

The insolvency experts say that the law providing for the plan binds corporate debtor (the company) and its members, employees, guarantors, and creditors, other stakeholders involved in the resolution plan. However, there are no obligations mentioned in the rule to give any treatment to the stakeholders other than the financial creditors (banks) and operational creditors, which includes vendors and others who may have dues.

The National Company Law Tribunal, based on the comfort provided by the revised rules, will choose the final resolution plan based on bids that are received. The lawyer further said, “The tribunal will not clear the resolution plan without giving notice to all stakeholders and the flat buyers can raise objections at that point of time.”

Also Read: Tanvi Group Fail To Deliver Homes And Declare Bankruptcy

Continue Reading

Trending