Friday, August 10, 2012

WHAT CAN BRING THE COST OF CAPITAL DOWN TO AFFORDABLE LEVELS?

Further, foreign direct investment (FDI) in the real estate sector should not be subjected to the condition of minimum three year lock-in period for repatriation of the original foreign investment. This shall ensure availability of greater capital and liquidity for developers to fund their existing projects and growth. Government should also grant industry status to the real estate sector. This will certainly help the players raise the much needed construction capital at low cost domestically. In fact, this has been a long pending demand from the sector.

Stamp duty rates on property transactions too need to be rationalised or brought down and should be made uniform across all states. Moreover, an upward revision to tax exemption to the extent of Rs.3 lakh against the existing limit of Rs.1.50 lakh should be made available on housing loan interest payment under section 24(b) of IT Act. This will help boost demand for residential units in the country.

I also feel that the real estate regulator should be set up with an intention to make the system transparent, efficient and competitive and to protect the interests of consumers. It should serve as a platform wherein, if the developers have issues with local bodies, the regulator should assist them in addressing these issues. All these changes will certainly contribute towards the sector’s growth in the long run.


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