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Industry body NAREDCO has called on the Union government to introduce targeted policy measures for the real estate sector in the forthcoming Budget, including a sharp increase in the home loan interest deduction limit and the grant of industry status. The association has sought a rise in the interest deduction cap for self-occupied homes to INR 5 lakh from the current INR 2 lakh, alongside a revision in the definition of affordable housing. It has proposed that homes priced up to INR 75-80 lakh be classified as affordable, instead of the existing INR 45 lakh threshold. NAREDCO said these steps would support housing demand, particularly in the affordable and mid-income segments. The body also highlighted the need to promote rental housing through fiscal incentives, citing low rental yields that deter private developers from investing in rental-led projects.
Realtors apex body NAREDCO has urged the Centre to announce a series of policy interventions for the real estate sector in the upcoming Union Budget, aimed at boosting housing demand and improving sectoral viability. Addressing a press conference in New Delhi earlier this week, the association sought an increase in the deduction limit for interest paid on home loans for self-occupied properties to INR 5 lakh from the existing INR 2 lakh. Advertisement
The body also pressed for industry status for the real estate sector, stating that such a move would enable developers to access cheaper institutional finance for key inputs, including land and construction materials. According to NAREDCO, the absence of industry status continues to constrain financing options despite the sector's significant contribution to economic growth and employment generation.
NAREDCO Chairman Niranjan Hiranandani said that while the government has taken several steps to support real estate in recent years, more focused measures are required to strengthen the affordable housing segment. He indicated that achieving the national objective of housing for all would require housing to be treated with the same priority as other infrastructure sectors. He also suggested that the government should utilise its own land parcels for the development of affordable and mid-income housing projects.
The association further recommended a revision in the definition of affordable housing, proposing that homes priced up to INR 75-80 lakh be brought under the affordable category, compared with the current ceiling of INR 45 lakh. NAREDCO stated that such a change would better reflect prevailing market realities in urban centres and improve buyer eligibility for lower tax rates.
NAREDCO President Parveen Jain reiterated the demand for a higher interest deduction limit on home loans, stating that the current cap does not adequately support homebuyers amid rising property prices. He also emphasised the need to promote rental housing through appropriate incentives for developers.
Jain pointed out that rental yields in the housing segment remain low, at around 1-3%, making rental housing financially unviable for most developers. He said tax incentives and supportive policy measures could encourage private participation in rental housing development.
Highlighting the sector's long-standing demand for industry status, Jain said the real estate market's projected growth to USD 1 trillion by 2030 further underscores the need for structural policy support. He added that expanding the affordable housing definition would also allow more projects to qualify for the lower GST rate of 1%, supporting both developers and homebuyers.
Source - PTI
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