A home of one’s own is a dream for everyone. However, in today’s times, it seems that the middle class is unable to afford a house of their own. Whether you want to buy a house anywhere in Hyderabad, you need to invest lakhs or even crores of rupees. Therefore, real estate experts believe that construction companies need to build homes at affordable prices, keeping the middle class in mind.
At some point in life, everyone dreams of owning a home. For the middle class and lower-middle class, it often means saving money over many years and, in addition, taking loans from banks to try and afford a home. However, in recent times, the prices of land and homes have increased drastically. In cities like Hyderabad, purchasing a home now requires lakhs or even crores of rupees. Along with the rise in land prices, construction costs have also skyrocketed. As a result, home prices have become unaffordable for the middle class.
That’s why experts in the real estate sector emphasise the need to build homes at affordable prices. Affordable housing projects benefit both builders and buyers, yet many builders continue to focus solely on high-priced projects. As a result, even those with a monthly salary of 50,000 are reluctant to buy homes. The central government is providing various incentives and subsidies to promote the housing sector with the goal of ensuring that everyone has a home. Builders undertaking affordable housing projects also benefit from these incentives. For residential units, those under affordable housing projects are identified as being no larger than 60 square meters in metro cities and no more than 90 square meters in nano metro areas. The government offers subsidies for homes whose property stamp value is less than 45 lakhs. Experts say that builders who take up such projects also benefit from income tax exemptions on the profits generated.
There are many benefits for buyers when purchasing homes under affordable housing projects. Typically, when buying an under-construction home, a 5% GST is applicable. However, in the case of affordable housing projects, the GST is only 1%. Moreover, buyers can avail significant exemptions from income tax. As per Income Tax Section 24, home loan interest payments can be claimed as tax exemptions up to 2 lakhs.
Although both builders and buyers benefit from affordable housing projects, such projects are not available in major cities like Hyderabad, Visakhapatnam, and Vijayawada. Especially in Hyderabad, even in suburban areas, builders are not focusing on constructing projects with affordability in mind, with most projects priced above 45 lakhs. If homes were available in the 45 to 60 lakh range, a significant portion of the middle-class population would be able to fulfill their dream of owning a home, and it would also give a significant boost to the construction industry.
Homebuyers are often deterred by the additional costs associated with purchasing a home, such as the margin money for home loans, GST, registration fees, stamp duty, and woodwork components. These factors make homeownership somewhat out of reach for the middle class. However, real estate experts believe that if the government incentivizes affordable housing by offering land with subsidies and other benefits, the housing sector in both Telugu states could grow at a much faster pace.
The National Executive of NAREDCO has suggested that the definition of affordable housing needs to be revised. Currently, affordable housing is considered to be priced at Rs 45 lakhs, with an area of up to 650 square feet. The recommendation is to increase the price limit to Rs 1 crore. This change would also lead to additional GST and income tax exemptions, which could be passed on to homebuyers by builders. Furthermore, they have suggested that states should have the flexibility to determine the area, as a 650 square foot flat might be acceptable in cities like Mumbai but could be considered too small in other areas.
NAREDCO Telangana’s executive believes that a positive decision on these requests is expected soon, which would help make affordable housing more accessible and boost the construction industry.
