Housing Finance - providing the real thrust for the Housing sector

Today, it is a fact that there are over 250 big and small housing finance companies vying for their share of the growing market. Of these only about 29 get refinance from the apex body NHB.

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 - providing the real thrust for the Housing sector
Today, it is a fact that there are over 250 big and small housing finance companies vying for their share of the growing market. Of these only about 29 get refinance from the apex body NHB.

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.