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Realty on Gung-Ho in New Budget
Indian real estate sector seems to be aggressive in the budget, which it believes, will bring a hike in prices with growing demand. The budget seems to have loosened its threads for senior citizens while mooting creation of mortgage guarantee companies.
This is likely to encourage home buying, the industry looks relaxed with a cut down in prices of construction material especially cement and steel, resulting in softening of real estate prices.
The Finance Minister took up the long waiting demand of the industry and ensured to introduce “reverse mortgage” scheme. It will allow a senior citizen (owner of a house) to avail a monthly stream of income against mortgage of his/her house, while remaining the owner throughout his/her lifetime. The scheme eliminates the need for them to repay or service the loan during that period. However, the owner’s heir may opt for paying up the loan ands take back the property after the owner’s death. In case, the heir fails to pay back the complete amount, the property will go back to the bank.
Chidambaram also assured to put regulations in place to allow creation of mortgage guarantee companies. Regulations would be put in place to permit the development of mortgage guarantee companies. This will allow housing finance companies (HFCs) and financial institutions to offer loan to people, where HFCs were not earlier eager on.
With so much to create demand, property market feels twisting the excise duty on cement which will further bring a drop in prices.
FM has proposed to decrease the rate of duty from Rs 400 per tonne to Rs 350 per tonne on cement sold in retail at not more than Rs 190 per bag rate while adding it to Rs 600 per tonne on cement that has a higher MRP.
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