Realty bodies push to change affordable housing definition

With Finance Minister Nirmala Sitharaman set to present the Union Budget 2020-21 in Febuary, real estate chambers have sought dilution in the definition of the affordable housing, so that more properties could come under its ambit and avail the benefits.

Currently, the definition of affordable housing means a house or flat with carpet area up to 90 square metres in non-metropolitan cities and towns, and 60 square metres in metropolitan cities and having value up to Rs 45 lakh, for both.

The Confederation of Real Estate Developers Association of India (CREDAI) has sought a revision in the definition of affordable housing.

"Following definition may be made universally applicable across all government agencies: 'Affordable housing comprises units with a carpet area as defined under RERA that do not exceed sixty square metres in the metros and 90 square meters elsewhere',"  President of CREDAI (National) Satish Magar said in the recommendation note.

The National Real Estate Development Council, in a recent note to the Finance Ministry, also suggested that all the houses in Mumbai Metropolitan Region (MMR) and most of them in the National Capital Region (NCR) do not qualify as affordable housing resulting in loss of benefit of reduced GST of 1 per cent and also the benefit of tax exemption from such projects.

"We recommend that the condition related to price cap of Rs 45 lakh be immediately abolished and the benefits be restored to all the houses which has area less than 60/90 square metres," he said.

Apart from lower GST, another major benefit of affordable housing is that the segment has been accorded the industry status, making projects eligible for cheaper bank loans.

Among other demands, developers also want a one-time roll over or restructuring of loans taken by developers.

CREDAI, in its recommendation, has said: "Liquidity shortage continues to cause distress in real estate. Hence, a one-time restructuring scheme with moratorium on principal and interest of 2 years is immediately needed."

In its recent note, NAREDCO also told the Finance Minister that recent measures by the government to revive the realty sector have so far not yielded results and the government should provide a one-time roll over or restructuring of loans taken by developers, among other suggestions.

CREDAI President Magar also said that housing loan up to Rs 1 crore may be counted towards 'priority sector' and interest rates to be below 7 per cent effectively.