Credai said since real estate
was reeling under a slowdown before Covid-19, a one-time restructuring should be allowed on all accounts which were standard before December 31, 2019.
The Reserve Bank of India on March 27 and May 22 permitted a moratorium of three months each on payment of all installments falling due between March 1 and August 31.
"While the said moratorium may help the real estate industry survive in the short term, it may kindly be appreciated that the current situation is much worse than 2008 Global Financial Crisis when RBI permitted a one-time Restructuring (OTR) saving hundreds of industries and lakhs of Jobs," Credai said.
Credai demanded that all banks, non-banking financial companies (NBFCs) and housing finance companies (HFCs) be directed to provide additional credit equal to 20 per cent of the existing real estate project related advances with no additional security and without the classification of the project as NPA.
Further, it said in order that the pandemic is prevented from becoming a source of unjust enrichment for the lenders, the penal interest charged by banks and financial institutions should be suspended for one year or till such time as it takes for the pandemic to abate.
To boost demand for residential properties, it said the government should reduce the maximum rate of interest on new home loans to five per cent by subsidising interest components of EMIs for the next five years. It also sought an increase in the limit of principal deduction on housing loans under Section 80C to 2.5 Lakh and interest deduction under Section 24 on housing loans taken by homebuyers to Rs 10 lakh.
“There should be no capital gains for residential properties held for more than one year. To avert economic ruin due to the collapse of the housing market, it is imperative at this time that NHB and RBI withdraw circulars and direct resumption of subvention-based funding with only safeguards being the acceptable rating of the developers and the project,” it said.
It said RBI should allow HFCs a 24-month subvention scheme to homebuyers from developers. “This 24 months’ subvention should be adjusted by extending the loan tenure by 24 months, with the subvention amount recovered in the last two months” it said.
Credai said the government should take up the issue of an abrupt rise in steel and cement prices urgently. It said cement prices have gone up by Rs 100-Rs 250 per bag, while steel prices have risen by Rs 2,000-2.500 per metric tonne.
To induce buyers in metros to buy homes, the benefit of GST at one per cent should be extended to units priced up to Rs 75 lakh, it said. Currently, one per cent GST is for affordable housing priced below Rs 45 lakh.
Lastly, it said that given the current crisis, the special fund given by the government for completion of projects should be disbursed quickly to complete stuck projects, and given the cuts in repo rates announced by RBI to four per cent, the fund should be given within an expected rate of interest of eight to nine per cent.
“The guidelines of the SWAMIH fund may be amended to accommodate the above two impediments in its operationalization,” it said.