Second relief window soon for realty sector, Economic Times, 23rd January 2008

Second relief window soon for realty sector

Economic Times, 23rd January 2008, Page 15

Rajat Guha NEW DELHI
THE government is considering a second relief package for the real estate and housing sector, which is crumbling under liquidity crisis and a slowdown in demand. Apart from giving real estate an infrastructure status, the measures being looked at include reduction in interest rates from 9.25% to 7.5% for home loans up to Rs 30 lakh, an official in the department of industrial policy and promotion (DIPP) has said. The ministry may also consider a proposal for doubling of income tax rebate on home loan interest to Rs 3 lakh from Rs 1.5 lakh and raising of income tax exemption on rentals from 30% to 50%. Finance secretary Arun Ramanathan is learnt to be finalising a note on required measures for easing liquidity in the housing and real estate sector for the consideration of the Committee of Secretaries (CoS). “The finance ministry is considering demands of the real estate industry which could not translate into reality in the first fiscal package of the government,” a senior DIPP official told ET. The official added that in the meeting of the CoS on economic crisis, held last month, Mr Ramanathan had pointed out that the recommendations made by real estate industry body Confederation of Real Estate Developer’s Associations of India for stimulating the real estate sector, including the housing sector, need to be considered. The recommendations made by the association were forwarded by the urban development ministry to the CoS. Cabinet secretary KM Chandrashekhar had observed that construction activities need to be stimulated as this sector has considerable employment potential. The first stimulus package had left realtors unhappy. They complained that the existing stock of unsold homes cost much more than Rs 20 lakh, so that the interest rate concession on loans up to Rs 20 lakh would not help their sale. Public sector banks are now offering homes loans up to Rs 5 lakh at a rate of 8.5% and up to Rs 20 lakh at 9.25%. Urban development minister Jaipal Reddy has also urged Prime Minister Manmohan Singh for taking steps to rev up the real estate sector. He sought an equal commitment from the sector in the form of pricecuts. “The commitment from the realty sector may include lowering of prices for houses and more and more investments in affordable housing,” Mr Reddy had written to the PM.