Indian Real Estate Forum - www.indianrealestateforum.com - View Single Post - Real budget expectations in the real estate sector

bikash · 01-03-07

The real estate sector is gung-ho on the budget, which it believes, will not only further drive demand but also temper prices going forward.

The finance minister has cleared reverse mortgage scheme for senior citizens while mooting creation of mortgage guarantee companies.

While these are expected to spur home buying, the industry is happy with the fact that critical input — cement and steel — prices would come down, resulting in softening of real estate prices.

The finance minister in his speech took up the long standing demand of the industry saying that National Housing Bank (NHB) would introduce “reverse mortgage” scheme.

The scheme will allow a senior citizen who is owner of a house availing a monthly stream of income against mortgage of his/her house, while remaining the owner and also occupying the house throughout his/her lifetime. Neither they have to repay or service the loan during that period.

Industry feels that people would look at buying property not only for shelter but also for financial security in the old age.

Typically, after death of the owner, his or her heir may opt for paying up the loan (money she received through reverse mortgage) and take back the property. If the heir does not pay back, the property goes back to bank.

Chidambaram also said regulations will put in place to allow creation of mortgage guarantee companies.

This will allow housing finance companies and banks to offer loan to those people where housing finance companies (HFCs) are not earlier keen on. If their loan is underwritten, HFCs may consider offering loan to weaker section of the society and senior citizen’s too.

While so much for demand creation, real estate industry feels tweaking of excise duty on cement will also help reduce prices.

FM has proposed reduction in the rate of duty from Rs 400 per tonne to Rs 350 per tonne on cement sold in retail at not more than Rs 190 per bag rate while increasing it to Rs 600 per tonne on cement that has a higher MRP.

Reduction in import duty on seconds and defective steel, used in production of some construction steel, will also help.

01-03-07	#3
bikash New Member Join Date: Jan 2007 Posts: 25 Thanks: 0 Thanked 0 Times in 0 Posts	Realty is all smiles The real estate sector is gung-ho on the budget, which it believes, will not only further drive demand but also temper prices going forward. The finance minister has cleared reverse mortgage scheme for senior citizens while mooting creation of mortgage guarantee companies. While these are expected to spur home buying, the industry is happy with the fact that critical input — cement and steel — prices would come down, resulting in softening of real estate prices. The finance minister in his speech took up the long standing demand of the industry saying that National Housing Bank (NHB) would introduce “reverse mortgage” scheme. The scheme will allow a senior citizen who is owner of a house availing a monthly stream of income against mortgage of his/her house, while remaining the owner and also occupying the house throughout his/her lifetime. Neither they have to repay or service the loan during that period. Industry feels that people would look at buying property not only for shelter but also for financial security in the old age. Typically, after death of the owner, his or her heir may opt for paying up the loan (money she received through reverse mortgage) and take back the property. If the heir does not pay back, the property goes back to bank. Chidambaram also said regulations will put in place to allow creation of mortgage guarantee companies. This will allow housing finance companies and banks to offer loan to those people where housing finance companies (HFCs) are not earlier keen on. If their loan is underwritten, HFCs may consider offering loan to weaker section of the society and senior citizen’s too. While so much for demand creation, real estate industry feels tweaking of excise duty on cement will also help reduce prices. FM has proposed reduction in the rate of duty from Rs 400 per tonne to Rs 350 per tonne on cement sold in retail at not more than Rs 190 per bag rate while increasing it to Rs 600 per tonne on cement that has a higher MRP. Reduction in import duty on seconds and defective steel, used in production of some construction steel, will also help.