Real estate developers body, the Confederation of Real Estate Developers Associations of India (CREDAI), in its wish list for Budget 2024, has said that the government should consider allowing unlimited interest deductions for the first self-occupied property or increasing the deduction limit to ₹5 lakh from ₹2 lakh for homebuyers.
For builders, it should offer incentives to construct affordable housing projects as well as streamline the approval process.
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“To stimulate homebuying, the finance ministry should consider allowing unlimited interest deductions for the first self-occupied property or increasing the deduction limit to ₹5 lakh to boost real estate investments and spur demand, benefiting the overall market,” Credai said in a statement.
Streamline approval processes, and provide subsidies to developers constructing affordable housing projects
CREDAI has said that the government should revise the definition of affordable housing and suggest definitive direct taxation and financial incentives.
The existing threshold for affordable housing, set at ₹45 lakh since 2017, has remained unchanged despite a significant 24% increase in housing prices in India since June 2018, as per data from the National Housing Bank.
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This underscores the urgent necessity for revision. Concurrently, inflationary impact and escalating costs of raw materials have deterred real estate developers from investing in affordable housing projects as providing quality homes at the current threshold limit is a challenge.
To address inflation and the soaring housing rates in both metro and non-metro cities, industry proponents advocate for revising the affordable housing threshold. This adjustment would align with current market dynamics, ensuring sufficient availability to meet present and future demand, Credai said in a statement.
Credit Link Subsidy Scheme
To optimize the effectiveness of the Credit Link Subsidy Scheme (CLSS), the government should consider augmenting allocated funds, streamlining application procedures, and intensifying awareness campaigns.
The scheme currently benefits 25.04 lakh recipients with an interest subsidy exceeding ₹58,868 crore. This reach of the scheme should be extended to beneficiaries in the EWS, LIG, and MIG income categories through simplified eligibility criteria and enhanced digital outreach efforts. A 20% increase in the subsidy ceiling would enhance accessibility to homeownership for low- and middle-income families, it said.
Collaborations with financial institutions to offer reduced interest rates could further encourage participation, ensuring the scheme effectively addresses housing affordability and fosters economic growth, it said.
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“With its significant contribution to the GDP, employment generation, and infrastructure development, the real estate sector looks forward to a supportive budget that addresses certain long-standing challenges and sets the platform for sustainable and sustained growth. Our recommendations are aimed at sustaining demand through a slew of measures including increasing interest exemption for home buyers, reintroduction CLSS, and steps required to boost affordable housing,” said Boman Irani, president, CREDAI.
CREDAI remains committed to working closely with the government to create a conducive environment for the real estate sector and contribute to India’s socio-economic goals, while cohesively striving to keep real estate at the nucleus, he added.
PropEquity founder and CEO Samir Jasuja stressed the need for a single-window clearance system to ensure timely approvals for real estate projects.
Manoj Gaur, CMD, Gaurs Group said that “The real estate has pinned high hopes on the forthcoming budget. First of all, the sector is looking for the reintroduction of the interest subvention scheme to revive mass housing”.
