Budget fails to address key concerns of real estate sector: CREDAI, NAREDCO

The real estate industry has said that the Union Budget should have addressed crucial areas, such as the affordable housing segment. 

Rising home loan interest rates and the outdated definition of affordable housing have created barriers for many potential homeowners. The government should prioritise revisions to the current housing cap, which has been stagnant for nearly eight years, making it difficult for developers to deliver affordable homes within the set limits,” G Hari Babu, the President of the National Real Estate Development Council (NAREDCO), has said.

“A more substantial focus on reducing home loan rates and offering tax benefits for affordable housing projects would help make homes more accessible to middle-class families. Reforms to the capital gains tax framework and the introduction of tax relief for rental housing would also ensure a more sustainable and equitable real estate market,” he said.

He welcomed the establishment of the Urban Challenge Fund, which is aimed at redeveloping cities and improving water and sanitation infrastructure. 

“This fund will support up to 25% of bankable projects, with a requirement to raise at least 50% of funding through bonds, loans, and PPPs. Additionally, ₹15,000 crore has been allocated for the rapid completion of 1 lakh dwelling units, contributing to the affordable housing sector,” he said.

Meanwhile, the Confederation of Real Estate Developers’ Associations of India (CREDAI) felt that the budget did not recognise the real estate sector’s crucial role in economic growth and employment generation.

Key concerns

While the retention of current income tax rates is noted, the absence of specific tax incentives for real estate investment is disappointing. Targeted measures, such as enhanced tax deductions on home loans and reduced GST on construction materials, would have significantly boosted sectoral growth.

“The allocation of ₹1 lakh crore for urban development is a step forward, but it remains insufficient to address the rising infrastructure demands of an urbanising India. The housing demand in the country is projected to reach 93 million units by 2036, necessitating greater financial support and policy initiatives,” V Rajasekhar Reddy, President of CREDAI (Hyderabad Chapter), said.

While welcoming the funding of ₹15,000 crore for stalled projects under SWAMIH Fund- 2 is welcome, he doubts whether this funding was sufficient to tackle the current backlog.

“While the budget includes provisions to support affordable housing, CREDAI Hyderabad urges the government to introduce more comprehensive policies, including interest subvention schemes and relaxation of mortgage conditions, to make homeownership accessible to a larger population,” he said.