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Reduce home loan rates to 8% – real estate developers

National Real Estate Developers Council (NAEDCO) asked for lowering of interest rates on home loans to 8% and said it would help achieve housing for all by 2022.

In a ‘Delhi Declaration’ issued at the end of the two-day national convention, NAREDCO welcomed the government’s commitment to clear various bottlenecks in implementing the policy and adopt a PPP model to develop mass, affordable housing. “The developer community will be more than happy to be a valuable stake holder,” it said.

NAREDCO president Mr Sunil Mantri said the implementation of the National Housing policy will require changes in master plan for urban development and funds up to Rs 12 lakh crore a year. The council, therefore, urged the government to make available low cost funds at least for affordable housing and encourage foreign direct investments in the sector and take steps to implement single window system for clearance of real estate projects across the country.

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Welcoming the efforts by Union Urban development Minister M. Venkaiah Naidu to advise the official machinery to speed up the implementation of the policy, the convention suggested that real estate should be accorded infrastructure status since it contributes handsomely to the GDP and supports about 250 other industries and generates massive employment.

This Convention appreciated Environment and Forests Minister Shri Prakash Javadekar for allowing local level clearances for projects up to 40 hectares and appealed to him to examine the clearance via the automatic route projects up to 50,000 sq mtr. Environment Clearance should be part of Master Plan/Development Plan at development stage and individual clearances should be done away with, Mr Mantri said.

Welcoming the announcement made by Surface Transport Minister Mr Nitin Gadkari to convene meetings of all parties to make necessary changes in the Land Acquisition Act, NAREDCO called for exempting private land acquisition from the Act.

The real estate sector, particularly housing, is under a lot of pressure due to the lack of price rise. The sector requires house prices to rise at least by 15% a year to keep salaried and other individuals to keep buying houses. With the rate of price rise falling to single digits, many salaried people are thinking twice before taking a housing loan as the loans often carry an interest of 10%.

In other words, a real estate investor in the current market gets back only what he pays as interest to the bank. This reluctance has in turn led to even slower price rise, which is in turn impacting investor appettite and so on in a cycle.

The real estate sector wants banks to lower interest rates to 8% so that individuals can buy houses and still make a profit if they sell them later.

Mr Mantri said the convention requested the government to take steps for tax reduction and making available less expensive land for real estate as nearly 80% of the realty cost is taken up by taxes at various levels and spiraling land costs.

The convention also requested the Union Government to give guidelines to States to ease FAR/FSI restrictions and scrapping of ready reckoner for deciding stamp duties and pleaded with the government to declare a national policy on slum rehabilitation with incentives to developers to build free homes for the homeless poor.

NAREDCO urged the government to focus on infrastructure like roads, mass rapid transport, water and electricity while facilitating the housing sector’s development.

Hailing Labour and Employment Minister Mr Narendra Singh Tomar’s suggestion to enter into an MoU with the Government for skill development, NAREDCO said it decided to tie-up with ITI for skill development of construction labour. It urged the Government to ensure that the Labour Cess collected from developers is utilised as CSR activity for labour welfare by developer or contractor on the site itself

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