Union Finance Minister P Chidambaram’s decision to provide additional deduction of interest of upto Rs 1 lakh in 2013-2014 on first housing loan up to Rs 25 lakh has not cheered Mumbaikars who are yet to get their dream house even though this deduction will be in addition to the Rs 1.50 lakh standard deduction that is currently valid for salaried employees.
Advocate Vinod Sampat, president, Stamp Duty and Registration Payers’ Association, said, “The limit (Rs 25 lakh slab) is very less; it is only an election-oriented measure. Let the Finance Minister also provide the statistics of the number of flats available for Rs 25 lakh in Mumbai and Delhi; this is basically a populist measure keeping the forthcoming election in mind.”
Potential house buyers and builders in the city are disappointed with the announcement. They contend that one simply cannot get a house for Rs 25 lakh within Mumbai and even in the Mumbai Metropolitan Region (MMR), where housing prices have become unrealistic for ordinary working class people to even dream about.
Experts claim this move by the minister is good only for tier II and III cities, not for metros where the prices are on the higher side and loans are way beyond Rs 25 lakh. Anuj Puri, chairman, Jones Lang LaSalle, a real estate consultancy firm said, “However, this provision is only for the first year and with a carry-forward benefit of the unutilised deduction to the second year. This will help boost housing sales in tier II and III cities and peripheral areas and distant suburbs of metros, but not within the metros, where housing is more targeted towards the mid- and upper income segments.”
For example, in Dahisar, on the fringe of Mumbai, the per square foot rate touches Rs 10,000. Thus, to have a one BHK, the buyer has to pay no less than Rs 70 lakh. In such a scenario, the Rs 25 lakh loan is hardly of much use. Realty expert Ajay Chaturvedi said, “Even an affordable house within Mumbai Metropolitan Region costs more than Rs 75 lakh, so to avail a loan of Rs 25 lakh the person should have cash worth Rs 50 lakh, which is impractical. Thus, this is not at all a happy exemption for the home buyers in Mumbai and bigger metros.”