Most agents believe the recent Budget was a wasted opportunity, and the Government doesn’t know how to help the property industry.
Findings from two major surveys reveal the discontent among estate agents with Chancellor Jeremy Hunt (main picture) and other ministers responsible for housing policy.
Inadequate
A poll of 833 property professionals, commissioned by GetAgent, found that the vast majority were disappointed with the lacklustre Budget.
More than a quarter (27%) described the Budget as ‘inadequate’, and a further 54% said it was ‘underwhelming’.
The industry had been expecting an announcement on a 99% mortgage, but this was scrapped just days before, a decision that 56% agreed with.
Stamp Duty
There had been hopes of another Stamp Duty reduction, and 71% believe this should have been included by the government.
Two thirds (67%) said there should have been a buyer incentive introduced to help kick-start the market, with 64% stating they would have liked to have seen more focus on housing supply.
And a massive 83% think more should have been done to improve the homebuying and selling process.
The Tory party may as well have ignored the property market altogether.”
Colby Short, Co-founder and CEO, GetAgent
Colby Short, Co-founder and CEO of comparison platform GetAgent, says: “During what is likely their last budget for years to come, the Tory party may as well have ignored the property market altogether.
“Despite predictions, or maybe hopes, that there may have been stimulii for the property market, none were forthcoming.”
Meanwhile, in a snap poll of 160 letting agents carried out by tenant referencing firm Goodlord, 75% of respondents said they didn’t think the Government understood the pressure facing the sector.
And a further 19% weren’t sure, with just 6% saying they thought the Government truly understood.
Concern is rising among agents and landlords after sources within the Treasury revealed over the weekend that Jeremy Hunt (main picture with team) is planning a tax raid on the private rented sector within his Budget on Wednesday.
The Sunday Times has claimed that the Chancellor plans to raise £300 million primarily from those offering short-let accommodation to holiday makers via platforms such as Airbnb and Booking.com. This is part of a plan to help fund a 2p cut in the basic income tax rate.
“[Tax cuts] are my priority for the country. When it comes to this budget, I will only bring down taxes in a way that is responsible, and sustainable,” he said during a radio interview on Sunday.
Alarm
Both agents and landlords have flagged their alarm at the report, with NRLA’s Chief Executive Ben Beadle saying this morning that: “The Chancellor needs to address the chronic shortage of long-term rentals by attracting new landlords to the market.
“Squeezing holiday lets is not the answer. He should follow the advice of the Institute for Fiscal Studies and reverse punitive tax hikes which have stifled the supply of the homes renters desperately need.”
Extreme concern
Nathan Emerson, Propertymark
Propertymark has also pitched in, with its CEO Nathan Emerson saying he is ‘extremely concerned’ to see reports of a rumoured £300m attack on landlords within the budget at a time when many have already left the sector and many more are just about holding on.
“Just like traditional homeowners, inflation and interest rates have hit landlords with force and there needs to be recognition from the UK Government that to provide high quality homes, whether they be short term lets or longer-term housing, the system must be workable,” he says.
“It is unacceptable that there is constant aim being taking at landlords to the point the viability of the entire system is becoming seriously questionable for both existing landlords and future investors.”
As per a report by property consultancy ANAROCK, the affordable housing sector of India saw a decline of 20% percent in sales in 2023 as compared to a decline of 30% in 2022.
Interim Budget 2024: The interim budget for the financial year 2024 25 announced today was much anticipated and looked forward by the real estate players as they had hoped that the finance minister would provide a boost to the sector with a change in the definition of affordable housing.
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As discussed in the pre-budget consolidated study of some of the biggest names, almost all of them had a subtle but firm expectation that the threshold limit would be increased from the existing Rs 45 lakh.
As per a report by property consultancy ANAROCK, the affordable housing sector of India saw a decline of 20% percent in sales in 2023 as compared to a decline of 30% in 2022. Therefore, it was expected that the Interim Budget 2024 would provide a big boost to the real estate sector.
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Union Finance Minister Nirmala Sitharaman on Thursday strongly suggested that the housing and real estate sector has been given its due and post the Lok Sabha Elections more comprehensive and industry-friendly measures would be announced.
Here are the reactions from some of the reaction quotes on the Interim Union Budget 2024 from Real Estate and Infrastructure Sector experts:
1. “Under the PM Gati Shakti Plan, Rs 75000 crores have been invested in 2023-24 across 100 critical projects. The master plan is integral to India’s aim to build an inclusive, integrated, and comprehensive economy. Through systematic investments and capacity building it will improve productivity and enhance the overall business climate. The mega plan will be an absolute game changer for tier 2 and 3 cities in India through accelerated last-mile connectivity, mass mobility, green growth, and financial investments. Naturally, this will translate into increased demand for housing, commercial projects, warehouses, industrial parks, townships, etc.,” says Gurmit Singh Arora, National President, Indian Plumbing Association.
2. “The union budget reiterates a healthy economic growth marked by improved tax receipt, doubling of GST tax base, revision of fiscal deficit, etc. A healthy economy will augur well for real estate. GOI will come up with better policies and incentives to support mid-income housing, which is a commendable step. Another factor to look into is the constant growth in infrastructure through constructive steps. GOI has announced plans to build more airports, railway corridors, metro lines, EV facilities, etc. This will naturally translate into higher realty demand,” says LC Mittal, Director, Motia Group.
3. “In the middle-income segment, incentivizing women buyers can be a constructive step. This will increase the participation of women in the property market while also uplifting the overall demand. Women are now an important force in the Indian economy, as it is essential to leverage their potential judiciously. Another prudent step is to reduce the rental income taxation. In India, the rental income is taxed at 30%, which is seemingly high and is touted as a deterrent. A lowered rate will incentivize investments in the rental markets and can be instrumental in bridging the existing housing gaps, especially in urban centers,” says Anurag Goel, Director, Goel Ganga Developments.
4. “PM Gatishakti project can bring a windfall for real estate markets in tier 2 and 3 cities in India. The multimodal logistic projects will comprise building new airports, mass transit systems, railway corridors, roadways, waterways, etc. It will create a framework for a more inclusive, integrated, multi-phased growth in India. This will act as an economic growth multiplier with increased capacity development, employment creation, and investment inflow. Naturally this will push ahead real estate demand,” says Aman Gupta, Director, RPS Group.
5. “Benefits for women and first home buyers of a substantial nature will work as a catalyst in mid segment. Third home buyers to be encouraged. Rental income taxation to be reduced,” says Ananta Singh Raghuvanshi, President, NAREDCO Mahi.
6. “Outlining the goal of achieving the status of Viksit Bharat by 2047, the Interim Budget 2024 has incentivized the idea of Housing for All by initiating pro-people measures and ramping up modern infrastructural quality, which will invariably increase the demand for office spaces and retail assets in metro cities and nearby towns. As per a CBRE report, retail space leasing activity has shot up by 48% across eight major cities including NCR in 2023 in shopping malls and high street locations. The Budget has also given unequivocal importance to uplifting the standards of modern infrastructure to boost national growth and promote growth-inducive factors, that will concomitantly pace up demand and sales of commercial and retail projects in newly developing corridors and realty zones,” says Shiven Vikram Bhatia, Executive Director, Splendor Group.
7. “By advocating the philosophy of ‘Prosperous Bharat in harmony with nature’ and ‘First Developed India’, the Interim Budget 2024 presented by the Finance Minister announced Housing for Middle-Class scheme, Rooftop Solarization, and a new target of PM Awas Yojana-Gramin promising construction of 2 crore homes in the next five years. The idea of Modern Infrastructure and Geographical Inclusivity upheld in the Budget will usher in growth and systematic progress not only in metropolitan regions but also in Tier 2 and 3 realty zones. The demand for office and retail spaces is on a meteoric rise, which will increase manifold after the implementation of the reforms on the grass root level,” says Arvind Singh, Managing Director, Krasa Group.
8. “The ‘Viksit Bharat Budget’ had some keynote deliverances by the Honourable Finance Minister prioritizing pro-people initiatives, opportunities for growth and employment, Social Inclusivity, and Geographical Inclusivity in the Amrit Kaal. The Government has shown its steadfast commitment to ensuring Housing for All by announcing the Housing for Middle-Class scheme and setting a new target of construction of 2 crore homes in the next five years under the flagship PM Awas Yojana-Gramin program. The Housing for Middle-Class scheme marks a watershed period in the Indian housing landscape as it will financially empower the middle class and salaried strata of society to either build or buy their own homes, underlining economic amelioration of millions of people who sap in precarious conditions of unauthorized colonies and chawls. In addition, the Rooftop Solarization scheme will also be a boon as 1 cr household will be able to obtain up to 300 units of free electricity every month, leading to the development of resource-efficient economy,” says Amit Gupta, Director, Orris Infrastructure.
9. “Ensuring Housing for All was the central theme of the Interim Budget 2024 undergirding profound steps taken in the course of attainment of this objective. The Finance Minister announced a new eponymous scheme called ‘Housing for Middle Class’ under which the government will, through wilful measures, assist middle-class and low-income groups in constructing or purchasing their homes and help them accomplish their dream of home ownership. Additionally, the Government has also resolved to build 2 crore new homes in rural regions and villages under PM Awas Yojana-Gramin in the next five years. While giving 70% of houses under PM Awas Yojana in rural areas to women who are either sole or joint owners, the Government in its effort to ensure all-round social justice and equitable distribution of resources, has received plaudit from one and all,” says Vasudev Garg, Director, Rajdarbar Realty.
10. “The Interim Budget 2024 or Viksit Bharat Budget laid emphasis on the development of Modern Infrastructure, Geographical Inclusivity, and all-pervasive growth as the cornerstones of our rapidly growing economy. The Housing for Middle Class scheme announced by the Finance Minister which will empower the underprivileged sections to buy and build homes is a laudable move, enshrining the government’s commitment to Housing for All. This will speed up rapid urbanization and housing development in Tier 2 and 3 cities, attracting massive investments. On the whole, Luxury housing continues to gather steam, especially in metropolitan regions like Gurugram, while Affordable Housing developments will be predominant in Tier 2 and 3 markets. In addition, the Budget also announced the construction of 2 crore homes in the next five years under the PM Awas Yojana- Gramin. Although the demand for industry status and single-window clearances remain unmet, the Interim Budget introduced some pathbreaking decisions made on the principles of Reform, Perform, and Transform,” says Vikas Garg, Joint Managing Director, Ganga Realty.
Published Date:February 1, 2024 6:09 PM IST
Updated Date:February 1, 2024 6:09 PM IST
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With the interim Union budget for 2024-25 set to be announced today, real estate players are hoping that the finance minister will provide a boost to the sector with a change in the definition of affordable housing by raising the threshold limit from existing Rs 45 lakh.
Developers would also like to see an increase in the area limit for affordable housing units in terms of space.
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According to a study by property consultancy ANAROCK, the affordable housing category saw a decline in overall sales to approximately 20 percent of the overall pie in 2023 from over 30 percent in 2022. Hence, many developers are expecting the government to deliver a boost for this category.
The revision in the definition of affordable housing has been a long pending demand of real estate developers and homebuyers.
Vihang Sarnaik, Director, Vihang Group said that he expects the finance minister to establish a separate affordable housing index for each Tier-1 and Tier-2 cities with impetus to the housing affordability of the metro cities periphery.
It is crucial to incorporate essential factors such as inflation, land cost, construction cost, approval cost, and labour cost for defining affordability in housing.
“For instance, in the case of Mumbai, where housing costs are notably high, we hope that the Budget will increase the price ceiling of affordable housing from Rs 45 lakhs to Rs 90 lakhs so that the whole affordable scheme benefits reach its intended audience. As per the current affordable housing scheme, the limit is set at Rs 45 lakhs and you will not find a single home in Mumbai in that price bracket,” he said.
Budget 2024: Real estate sector pitches for industry status and lower interest rates
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Sandeep Runwal, President, National Real Estate Development Council (NAREDCO) Maharashtra, voiced similar concerns and said that there is a need to redefine the definition of affordable housing to boost this segment and the demand.
“We propose an increase in the cap from Rs 45 lakh to Rs 1 crore, particularly in metro cities. This change is expected to significantly boost both affordable and mid-segment housing. The industry also anticipates the continuation of incentives for affordable rental housing schemes,” Runwal said.
LIVE Updates from the Budget 2024
Earlier in November 2023, Dinesh Kapila, economic advisor at the Ministry of Housing and Urban Affairs had also said that classifying affordable housing as units up to Rs 45 lakh was unrealistic given the high price of land in cities.
He said that the finance ministry has been sent a proposal to “improve the definition of affordable housing”. Experts say that the price cap should be set at Rs 75 lakh, he added.
Nagaraju Routhu, CEO of Gurugram based Experion Developers, said that developers are optimistic to see a potential positive change in the budget, especially in the affordable housing sector, given that this is a general election year.
“With the hike in property prices over recent years, a thoughtful adjustment of this limit, perhaps to Rs 60-65 lakhs, would create avenues for the expansion and availability of affordable homes. With this adjustment, there could be a significant contribution to making housing more accessible and catering to the needs of a broader segment of the population,” Routhu said.
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Bengaluru: Following a boom year in 2023, the real estate sector in India has tempered its expectations from the interim budget 2024, to be presented by finance minister Nirmala Sitharaman on February 1.
The sector is asking for more sops to boost the one segment which did not do well last year – affordable housing.
“If you pick up any reports for the housing sector, they will demonstrate how the market is doing really well. Government also makes this assessment and where the sector is doing well, at least from the fiscal side (direct monetary support), we shouldn’t be expecting much,” Vivek Rathi, who heads research at property consultancy Knight Frank India, explained.
The National Council on Real Estate, Housing and Urban Development under ASSOCHAM is set to make a list of recommendations to the Ministry of Finance this week, the industry body’s chairman Pradeep Agarwal told DH.
Some of the measures that will find a place on the list include the demand of industry status for the sector, single window clearance to expedite execution of realty projects, revision in GST rules to allow input tax credit for all construction materials, reduction in stamp duty for property registrations and expansion of the affordable housing bracket to include units costing up to Rs 75 lakh, besides others.
Amid rising disposable incomes and a robust economy, the real estate market saw an unprecedented surge last year, especially the larger residential segment with home sales and launches registering record numbers. Several projects in the luxury housing bracket – estimated at thousands of crores – sold out within days of their launch.
However, one concern that came to the fore is the declining share of affordable housing. At 18%, the budget housing segment occupied the smallest share in the overall pie of housing supply in the top-7 markets, data from property consultant Anarock showed. Furthermore, sales of budget homes plummeted to 20% in 2023 from over 30% in 2022, and nearly 40% in the period before the Covid-19 pandemic.
Consequently, stakeholders are keenly eyeing the interim budget with strong expectations surrounding fiscal support for beneficiaries, and a rise in outlays, for the Pradhan Mantri Awas Yojana, both urban and rural.
Those like Vimal Nadar, who heads research at real estate consultancy Colliers, are also optimistic about additional provisions such as reintroduction of a tax holiday for development of low-cost housing projects, fresh tax exemptions for first time buyers of budget homes, expansion in the definition of affordable housing and so on.
The central government has stated that it constructed homes for over 4 crore impoverished households since coming to power in 2014. However, according to data available in the public domain, there still exists a shortage of 3 crore-plus housing units across rural and urban India. Furthermore, the completion timeline for PMAY, which seeks to provide ‘housing for all’, was extended from 2022 to December, 2024.
Beyond housing, the sectoral wish list includes measures to incentivise sustainable construction, development of electric vehicle infrastructure in residential areas, rationalisation in GST rates levied on key raw materials like cement, steel and aluminum, digitisation of land records, expansion in section 80C limits under the Income Tax Act and reduction in long-term capital gains tax.
(Published 21 January 2024, 21:58 IST)
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Sandeep Bagla, the CEO at TRUST Mutual Fund, stated in an interview with Moneycontrol that there is a high probability of 2024 being a volatile year. He advises investors to moderate their return expectations but remain invested in a disciplined manner. According to him, several risks are building up in the global economy, including geopolitical risks that could potentially lead to a disruption in the global supply chain.
Sandeep, who has over 25 years of experience in financial markets, warns that there is a significant risk of Central Bankers reducing their balance sheets beyond a tipping point, which could cause an abrupt halt in the asset price rally. It is essential to stay cautious and vigilant in such an unpredictable economic environment.
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Do you think, globally, premature interest rate cuts may be a mistake by central bankers?
An ideal monetary policy should be counter cyclical so as to reduce the volatility in output and employment, which are caused by the normal ebb and flow in business cycles. Interest rates should be raised when the economy is growing above trend and monetary conditions should be eased at times when there are signs of an economic slowdown. However, there are significant delays in recognizing the turning points in the economy and taking suitable actions, which lead to central bank measures exaggerating the trend rather than moderating it.
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In the past cycles, there have been occasions when central bankers have conducted premature rate cuts and inflation has risen again after some time. With so much excess liquidity still sloshing around in the global markets, the dangers of inflation need to be carefully considered before embarking on a rate-cutting cycle.
Will the inflation be only major risk factor to watch out for in 2024?
Multiple risks are building up in the global economy. The geopolitical risks are piling up and they could lead to a potential disruption in global supply chain. There is a great risk that the Central Bankers reduce their balance sheets beyond a tipping point which could result in an abrupt halt in the asset price rally.
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Inflation also remains a formidable risk as there seems to be continued growth in loan induced consumption, a potential rising wage price spiral, and tightness in global labour markets.
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Where do you see value while considering themes for investment in the new year?
There appears to be value in large-cap stocks in relative terms when compared to small and mid-cap stocks in India. The long-term bond funds appear to be attractive in India as corporate spreads have increased significantly. Investments in longer-term fixed-income funds could generate capital gains, thereby enhancing investor returns, if inflation remains under control and a global interest rate-cutting cycle starts.
Bond funds offer safer investment options which are likely to deliver inflation-beating returns due to high interest income and the possibility of rate-induced capital gains for investors.
Any sectors that you are least interested in for investment?
In some of the small and mid-caps, the valuation appears frothy as the markets seem to have discounted the best possible scenarios for the companies and there is little margin of safety for investors.
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Investors could avoid sectors which have seen a rapid rise in the recent past.
Do you think 2024 will be a volatile year for the markets and investors should not expect 15-20 percent kind of returns on the benchmarks front?
There is a good chance that 2024 could be a volatile year. The spectacular equity returns in 2023 were preceded by a lacklustre, low single-digit return in 2022. Investors should moderate their return expectations but remain invested in a disciplined way.
Do you expect government spending to increase in the current quarter, especially run-up to the general elections?
A large part of the government spending has already been front-loaded in the current financial year. One could see a pick up in the spending of departments which have lagged so far.
What could be one factor that can derail or put the market significantly on the back foot?
There could be bouts of profit taking which could keep markets in check. I see a reduction in global liquidity as the major risk for asset prices.
Do you have major expectations from the interim budget which is likely to be presented on February 1?
Increasingly, the budget announcements have become a statement of accounts of the central government, as they should be. The Government appears to be announcing major policy changes as and when they are required and not waiting for the Budget to announce them all together in a bunched manner.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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