With such
never-before plethora of loan providers, cut-throat competition
has ensued such that the key players have announced that bringing
down interest rates any further would be at everyone's peril.
Current tax
benefits associated on repayment of housing loans is up to Rs.1,50,000
on interest repayment and up to Rs.20,000 per annum on principal
repayment of the loan.
There is no
capital gains tax if the owner of the house reinvests the gain
in another house, however this is restricted to a maximum of two
houses only.
Housing finance
companies are allowed to raise funds from the market in the form
of fixed deposits and bonds with tenure of not more than 7 years.
There is TDS under section 195 for sale to NRIs.
Inadequate
foreclosure norms prevailing in the country, especially in case
of defaults has hurt the housing finance segment badly. Providing
a strong legal support mechanism for making changes in foreclosure
laws would give a real shot in the arm for housing finance companies.
If foreclosure
norms could ensure speedy settlement at the juncture of such cases,
we could expect housing finance companies to finance even 100%
of the property purchase while at present they would dare to provide
only to a maximum of 85% of the cost of the property.
There is a
major concern for a better and clear legal framework for property
developers, buyers and the housing finance companies.
It should
be remembered that the housing sector ranks fifth in terms of
employment generation. Any additional unit expenditure in the
construction sector enables multiplier effects resulting in eight-fold
increase in the employment generation in the economy especially
in the grass-root level. The sector has the ability to contribute
substantially to the GDP growth is now being realized by all.
Without doubt, with a booming economy and overall growth, the
property and real estate sector is on the verge of witnessing
the most unprecedented period of growth ever in India.