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To help builders clear unsold inventories, the finance ministry recently announced income tax relief for both the homebuyers and real estate developers (Mint)
To help builders clear unsold inventories, the finance ministry recently announced income tax relief for both the homebuyers and real estate developers (Mint)

Govt to consider classifying real estate sector as different asset class: Puri

  • The housing and urban affairs minister urged the real estate developers to offload unsold inventories
  • Puri also hinted that the government would encourage other states to reduce stamp duty for boosting the housing sales

The central government will consider classifying real estate sector as different asset class, housing and urban affairs minister Hardeep Singh Puri said. The aim is to provide the real estate sector a further boost, the minister expressed. “There was a proposal that the real estate needed a different asset class. We will push this forward," he said. Puri was addressing a virtual conference organised by realtors' body NAREDCO and Asia Pacific Real Estate Association (APREA).

To spur economic activity and boost demand, the minister urged the real estate developers to offload unsold inventories. "I think time has also now come to offload some inventories. Don't hang on to it," he mentioned.

To help builders clear unsold inventories, the finance ministry recently announced income tax relief for both the homebuyers and real estate developers. For primary residential real estate sales of up to 2 crore, the differential between circle rate and agreement value increased to 20% from 10% earlier. The move was aimed to help

"This 20% will lead to greater economic activities. All of you should step up now. Get rid of inventories," Puri added.

On classification of real estate sector as different asset class, Anuj Puri, chairman - ANAROCK Property Consultants said, "It shows that housing remains an important point on the government' overall agenda. While the industry has long been asking for industry status, any provisions or amendments which help in the development and consumption of housing will be welcome."

Pointing out the need to classify the real estate sector as a different asset class, Renu Sud Karnard, managing director, HDFC Limited said, “We need more reforms such as increasing the FSI, review of ECLGS – 2 schemes for housing finance companies to keep up the momentum."

Rajeev Talwar, national chairman NAREDCO urged the central government to consider FDI flows into the affordable housing segment and expected further tax reliefs on home loans to give a boost to housing construction.

Puri also hinted that the government would encourage other states to reduce stamp duty for boosting the housing sales. Maharashtra and Karnataka governments have cut stamp duty on transactions of immovable properties to boost sales. The initial estimate suggests that there has been good response to the move, he noted.

Puri said that he would write another letter to chief ministers and give a "renewed push".

The minister expressed satisfaction about the progress of Prime Minister Aawas Yojana (PMAY). He also praised the implementation of Affordable Rental Housing Complexes (ARHC) programme. These schemes are being seriously implemented and regularly reviewed at the highest level, he added.

“We have signed MOUs with 27 state governments for Affordable Rental Housing Complexes programme and have received over 28 lakhs registrations on the portal that speaks about its volume and need." he further mentioned.

Rajan Bandelkar, vice chairman, NAREDCO West said, “With the support of the government and the financial institutions, the real estate sector would soon be able to bridge – up the liquidity deficit and deliver the bankable projects. The foreign funding will increase significantly across asset-classes in the next year."

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