8216;Do not deny us our due8217;

It will certainly give an impetus to affordable housing but will not bring a turnaround as sops come along with certain caps. It will help boost housing sales in tier II and III cities,and metro suburbs,where the scope of constructing and selling affordable housing is more. The Budget proposal of additional tax deduction of Rs 1 lakh on home loans for first-time buyers will directly boost demand for affordable housing. This additional tax deduction can be carried forward to the next year in case the limit is not exhausted in the current year. With the ongoing interest rates of nearly 10.5 per cent, the total outflow for a loan amount of Rs 25 lakh would be Rs 3 lakh,of which,Rs 2.64 lakh for first year would be the interest outgo. The home buyer would get tax benefit equivalent to 95 per cent of the total interest burden,which was earlier only 57 per cent.

For FY13,the impact will be marginal. There is a substantial extent of home loans up to Rs 25 lakh in size all the new sanctions will have to be deferred to the next year,as borrowers will not like to lose this significant benefit.

With this additional rebate for buyers,do you see an immediate spurt in demand for your projects?

We expect to see a rise in demand in this space over a period of time. Our dedicated affordable housing subsidiary Smart Value Homes,has offerings in the range of Rs 15 lakh to Rs 50 lakh. Given this price point,it would not be wrong in assuming that most of our customers would be first-time home buyers. This year,we will be launching about 15-20 million sq ft of projects and will continue to expand our presence across 10 metros and emerging cities.

Will the proposal to set up an urban housing fund help mitigate the housing shortage in urban areas? What else should the government do to enable more supply in this segment?

The urban housing fund will work as a pool fund for developers strapped for cash. Most developers stay away from the affordable housing segment because it is not an attractively-priced segment and access to funds is limited. It has been a long-standing demand of the real estate sector to be granted industry status. This will help the sector become better-organised and increase accountability and help the sector access bank lending at average interest rates with low collateral as against the high rates at present,which would help bring down home prices and increase supply.

State governments should establish a single-window clearance system,which serves the three principal objectives of realistic price discovery,land allotment and granting approvals in a time-bound manner. This would ensure timely completion and avoid cost overruns. A haze of contradictory approval requirements,administrative delays and a dysfunctional system which works on multiple clearances are a bane for players in this sector.

Other than Budget measures,what are the procedural constraints need to be eased,for you to operate efficiently?

Developers are primarily looking at luxury,high-end and upper-mid housing segments since these fetch a premium. However,to be fair,its not always been a case of higher profitability that has driven developers away from affordable housing. Restrictive civic laws limiting floor space index FSI levels and high land rates in metros have actually made affordable housing unviable. Planners really need to pursue strategic densification,including relaxing FSI limits,which will ensure developers get decent margins. This will also bring down property rates,and release more supply.

The current focus of state governments has been limited to auctioning land to private players. This has contributed to escalation of land prices,detrimental to affordable housing.

The government would also do well to consider that apart from land rates,there has been a significant hike in input costs cement,steel and labour. For realty players promoting affordable housing,a tax incentive would be very welcome. Other incentives could include capital subsidy for PPP initiatives,regulated lower interest rates,discounts in stamp duty and registration,and priority sector credit for home loans up to Rs 25 lakh.

Brotin Banerjee,MD amp; CEO,Tata Housing