With an aim of reversing the slowdown, urban development minister Jaipal Reddy has sought an additional package for the real estate sector.
In a letter to the Prime Minister, the minister for urban development, said interest rates for home loans of up to Rs 500,000 should be kept at 6.5 per cent, while loans between Rs 500,000 and Rs 3 million should be levied interest of 7.5 per cent annually.
Reddy has stated that “more needs to be done to reverse the slowdown facing the sector”.
“Some of these suggestions with appropriate modifications could be favourably looked into,” Reddy said.
Domestic demand for real estate has fallen sharply amid high lending rates and tight liquidity.
In December, an industry lobby had said transactions had fallen 80 per cent, pulling down prices, and that projects had failed to take off with banks not willing to lend to the sector.
Reddy also said that the ceiling for income tax rebates on interest paid on home loans be raised to Rs 300,000 from Rs 150,000 currently.
“Housing projects should be treated at par with the infrastructure sector for all purposes including bank funding,” Reddy said in the letter.
But Reddy also said the industry should match government measures by lowering house prices and investing more in affordable housing.
Source: http://www.realtyplusmag.com/rpnewsletter/fullstory.asp?news_id=1192&cat_id=2
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