CREDAI Recommends Strategic Interventions for Affordable Housing, Direct Taxation And Financial Incentives For Homebuyers In Budget 2024

Confederation of Real Estate Developers' Associations of India (CREDAI) today shared a series of recommendations for the upcoming Budget - the first of the newly formed Government - to unlock the full potential of the Indian Real Estate sector across segments, including the Affordable Housing sector. While CREDAI has been consistently advocating for Affordable Housing and encouraging its members working towards fulfilling the aspirations of homebuyers, there are some fundamental concerns that CREDAI has urged the Government to address, as a part of its representations. The recommendations emphasize the importance of measures such as streamlined approval processes, and subsidies for developers investing in affordable housing projects. Additionally, CREDAI has also reiterated the importance of revising the definition of affordable housing along with suggesting some definitive direct taxation and financial incentives:

Affordable Housing: The existing threshold for affordable housing, set at Rs 45 lakhs 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. 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.

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. Presently benefiting 25.04 lakh recipients with an interest subsidy exceeding Rs 58,868 crore, the scheme could extend its reach to additional 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. Collaborations with financial institutions to offer reduced interest rates could further encourage participation, ensuring the scheme effectively addresses housing affordability and fosters economic growth.

Interest Deduction for Home Buyers: To stimulate homebuying, Finance Ministry should consider allowing unlimited interest deductions for the first self-occupied property or increasing the deduction limit to INR 5,00,000 - to boost real estate investments and spur demand - benefiting the overall market with multiplier effects.

Mr. Boman Irani, President, CREDAI shares his thoughts “With its significant contribution to the GDP, employment generation, and infrastructure development, the Indian 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 in interest exemption for home buyers, reintroduction of CLSS, and steps required to boost Affordable housing. 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 of India’s economic growth for decades to come.”