Real estate developers’ body 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 deduction for the first self-occupied property or increase the deduction limit to ₹5 lakh of ₹2 lakh for home buyers.

It should provide an incentive for builders to build affordable housing projects and streamline the approval process.

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“To stimulate home purchases, the Ministry of Finance should consider allowing unlimited interest deductions for the first owner-occupied home or increasing the deduction limit to ₹5 lakh to boost real estate investments and stimulate demand, which will benefit the overall market,” Credai said in a statement.

Streamline approval processes and provide subsidies to developers who build affordable housing projects

CREDAI has said that the government should revise the definition of affordable housing and propose definitive direct taxes and financial incentives.

The existing threshold for affordable housing, set at ₹45 lakh since 2017, has remained unchanged despite a significant 24% increase in house prices in India since June 2018, according to data from the National Housing Bank.

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This underscores the urgent need for a revision. At the same time, inflationary impact and rising cost of commodities have discouraged real estate developers from investing in affordable housing projects as delivering quality housing at the current threshold is a challenge. To address inflation and rising housing prices in both metro and non-metro cities, industry advocates are calling for a revision of the threshold for affordable housing. This revision would align with the current market dynamics and ensure adequate availability to meet current and future demand, Credai said in a statement.

Credit Link Subsidy Scheme

To optimise the effectiveness of the Credit Link Subsidy Scheme (CLSS), the government should consider increasing the allocated funds, streamlining application procedures and intensifying awareness campaigns.

The scheme currently benefits 25.04 lakh recipients with interest subsidy of over ₹58,868 crore. This scope 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 improve accessibility to home ownership for low- and middle-income families, the report said.

Partnering with financial institutions to offer lower interest rates could further encourage participation, ensuring the scheme effectively contributes to housing affordability and stimulates economic growth, the report said.

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“With its significant contribution to 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 series of measures, including increasing interest waivers for homebuyers, reintroducing CLSS and steps needed to boost affordable housing,” said Boman Irani, President, CREDAI.

CREDAI remains committed to working closely with the government to create an enabling environment for the real estate sector and contribute to India’s socio-economic goals as we collectively strive to keep real estate at the core, he added.

Samir Jasuja, Founder and CEO of PropEquity, stressed the need for a one-stop shop to ensure timely approvals for real estate projects.

Manoj Gaur, CMD, Gaurs Group said, “The real estate sector has high expectations from the upcoming budget. First of all, the sector is looking for the reintroduction of interest subsidy scheme to revive mass housing construction.”