Realtors Seek Rate cut from the Government

March 12, 2008	(Be the first to rate this story!)  Loading ...
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Realtors, who are disappointed with this year’s budget, believe a cut in home loan rates is the only way to ramp up the demand for housing. Vipin Agarwal, executive finance director of Omaxe Ltd, said, “High interest rates have drastically affected the growth of the sector. The growth is at 6 per cent compared with 30 per cent three years ago, when home loan rates were really low.”

Agarwal said although home loan rates at 7 per cent to 8 per cent were conducive for the growth of the sector, “it will not fall below 10.5 to 11 per cent”. The rates vary from 9.5 to 12.5 per cent for loans up to Rs 20 lakh and 11 to 13.5 per cent for greater amounts. Real estate players are disappointed with finance minister P. Chidambaram for not renewing the income tax relief vis-à-vis the construction of low-cost housing within a 1,000-square-foot area.

The benefit, which allowed builders to claim tax exemption on profits for making such small homes or flats, expired last year. Real estate players want the benefit to be revived to encourage middle and lower middle-class buyers of housing.

Real estate companies also complained that a hefty service tax on mall owners imposed in a previous budget had added to the higher pricing of flats. Ganesh Raj, analyst with Ernst & Young, said, “Service tax is ultimately a burden on end-users. Mall owners will add the extra expense incurred to the rentals. As a result, the cost of commercial space will become steeper and there will be fewer buyers.”

News Published Under:   Real Estate Developers |

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