Budget 2024: Developers expect measures to make housing more affordable

The upcoming Union Budget 2024-25 has given birth to expectations from the real estate sector and homebuyers to make housing affordable. The recent rise in real estate prices has led to a growing need to enhance affordability which would bolster demand and uphold investor sentiment.

In the interim budget presented in February, Finance Minister Nirmala Sitharaman laid more emphasis on long-term growth with a heightened focus on infrastructure and logistical development. The growth in infrastructure development has attracted investments in the real estate sector further strengthening it.

However, the real estate sector is seeking further reforms and measures that will help make housing more affordable and provide more support to the sector. One such measure calls for a raise in the cap on home loan interest deductions to ₹5 lakh. At present, the cap on home loan deductions sits at ₹2 lakh. Additionally, a reduction in the Goods and Services Tax (GST) and favourable Foreign Direct Investment (FDI) regulations will provide a boost to the real estate sector.

The National Real Estate Development Council (NAREDCO), the industry body for developers has called for the launch of the second phase of the Special Window for Affordable and Mid-Income Housing (SWAMIH). NAREDCO expects the launch of SWAMIH with a corpus of ₹50,000 crore to support the affordable housing segment.

NAREDCO is also expecting the forthcoming Budget to introduce an option for real estate developers to pay GST with or without input tax credit. The option to pay GST at a concessional rate will result in higher tax savings which would make housing more affordable for customers.

The real estate sector would also benefit from more focus on affordable housing schemes such as Pradhan Mantri Awas Yojana (PMAY) which will provide low and moderate-income groups access to affordable housing. Developers are also expecting the cap on affordable housing to be raised from ₹45 lakh to ₹75 lakh in metro cities such as the Mumbai Metropolitan Region and National Capital Region.