The anticipation of the Union Budget 2025 has generated significant interest in the real estate sector, particularly around the issue of affordable housing. Realtors nationwide expect the government to make public land available for affordable housing projects. This call for action addresses the pressing need for urban housing solutions. With increasing urbanisation and a growing middle-class population, the demand for budget-friendly homes continues to rise.
Industry stakeholders believe that leveraging government-owned land for such initiatives could significantly reduce costs and make housing accessible to millions. They also eagerly await policies that incentivise private participation and streamline approval processes.
Government Land for Housing
Developers believe surplus government land, including areas owned by various public sector entities, can be used to develop high-density rental housing. Such initiatives would help manage property prices in key locations and optimise underutilised commercial spaces for rental housing.
Tax Incentives for Buyers
Realtors are asking for tax benefits to boost home buying. Anand Moorthy, Co-founder and CBO, Capital Market and Services, Square Yards, said, “The first home-buyer must have benefits. There should be mechanisms to own homes for affordable homes below 50 lakhs or even one crore, such as no stamp duty. Without this, the affordability for many could be a serious issue in the coming decade.”
Increased Floor Space Index (FSI)
Developers are also requesting simplified approvals to allow for a greater Increased Floor Space Index (FSI), which would enable the construction of additional floors on existing properties. They suggest incentives for refurbishing older buildings into budget-friendly units could expand housing availability. Allowing smaller units with shared facilities can also improve feasibility while maintaining quality standards.
Boosting Rental Housing
Analysts emphasised the importance of promoting rental accommodation for lower-income families. Suggestions include offering a full tax exemption for rental earnings up to Rs 3 lakh on homes valued at Rs 50 lakh or less.
A National Rental Housing Fund, which would attract contributions from institutional investors and be structured under tax-efficient real estate investment trust (REIT) frameworks, is proposed to support rental housing further. This fund could provide sustainable financing for large-scale rental housing projects, ensuring a steady supply of affordable rental units across urban and semi-urban areas.
Rural Housing Needs
Experts highlight the need for specific measures to enhance rural housing. Making land available at subsidised rates and accelerating project approvals can significantly boost development. Additionally, strengthening infrastructure through government schemes can provide the necessary support for long-term rural housing growth.
Encouraging Foreign Investments
Developers are pushing for easier foreign investment regulations to attract global firms to India’s real estate sector. They also want single-window clearance to set up new offices, particularly for global capability centres (GCCs). Industry experts, including Anand Murthy, believe that government allocation and policies encouraging foreign direct investment (FDI) in affordable housing could significantly bolster the sector. Simplified regulatory frameworks and tax incentives for foreign investors could make India an attractive destination for global capital, driving large-scale housing developments.
By integrating government support with international investment, the sector could benefit from a surge in funding, technology, and expertise. Such measures would address housing affordability and strengthen India’s position as a hub for real estate investment, fostering long-term economic growth and urban development.
Read more through the links below to uncover the key trends and market leaders driving this growth:
Deccan Herald – https://bit.ly/3Cgrmya
Published Date: 20 Jan, 2025
