Leading realtor Niranjan Hiranandani laid out a five-point formula to give a boost to the real estate sector including hiking home loan interest deductions from ₹2 lakh to ₹5 lakh, increasing the standard deduction for housing from 30 per cent to 50 per cent, giving infrastructure status to townships and large real estate projects, increasing the value of affordable housing to ₹1 crore, and increasing the loan to value (LTV) on home loans.
Surge in housing prices
“The house prices have gone up tremendously. My request to the Finance Minister is to increase the deduction in home loan interest for the middle class to ₹5 lakh, adding that the deduction in home loan interest was brought up to ₹2 lakh 12 years ago from ₹1 lakh,” he said.
Another pain point for the middle class, according to Hiranandani, is the threshold of affordable housing which is capped at ₹45 lakh. “Unfortunately, all the homes are priced higher than that because the ready reckoner rate also is higher than that. So we are requesting that the government increase it to ₹1 crore at least.”
Home loans safest
The third pain point for individuals looking to buy a house, according to him, is getting a loan. “My request to the RBI Governor is to increase the loan to value. Home loans in India are the safest and the NPAs in home loans in India are the lowest in the world — it is less than 1 per cent. I have checked with leading banks and found out that 50 per cent of the people who take loans have repaid in seven years. This is the only country in the whole world where this takes place. So, we need to encourage people to buy houses, to take a loan, pay that amount of loan; we don’t want it free from the government.”
From the point of realtors, Hiranandani pointed out that today international investors do not invest in residential projects in India becausethe return on investment is way lower. Hence, “My request to the Prime Minister is, if you want to increase housing in India, you need to see that the standard deduction given for housing which is 30 per cent goes up to 50 per cent to make it lucrative not only for foreign investors, but also for Indians.”
Lastly, he pointed out a mismatch in the loan tenure given to realtors who build townships. According to Hiranandani, the banks only offer short-term loans for townships. Since townships take a lot more time to build, he urged that the government could give them an infrastructure status.