Union Budget 2024: Real Estate Sector Anticipates Reforms to Revive Affordable Housing

Union Budget 2024: Real Estate Sector Anticipates Reforms to Revive Affordable Housing

With the Union Budget 2024-25 set to be tabled in July, the real estate sector has renewed hopes for the reforms agenda that will be laid out by the Modi 3.0 regime. Expectations range from tax reliefs to more measures for the welfare of the people and addressing the growing need to help people meet their aspirations of owning their own house.

Hopes for the Real Estate Sector

The future of the overall industry also depends on unfettered infrastructure deployment to support and improve urban living standards, as well as to develop and promote newer areas. Will the government finally decide to accede to the long-standing demand for industry status for the entire housing sector? Will it take 'real' measures to revive the affordable housing segment, which has been on a steady decline after the pandemic? This remains to be seen.

Expectations from Union Budget 2024

The real estate sector is looking forward to comprehensive reforms that include tax reliefs and policies aimed at improving the welfare of the people. These measures are essential to support the growing need for affordable housing and to help individuals achieve their dream of homeownership.

Infrastructure Development

Unfettered infrastructure deployment is crucial for enhancing urban living standards and developing new areas. The government's commitment to these initiatives will play a significant role in shaping the future of the real estate industry.

Industry Status for Housing Sector

One of the long-standing demands of the real estate sector is to grant industry status to the entire housing sector. This move could bring significant benefits and boost the overall growth and development of the industry.

Revival of Affordable Housing

The affordable housing segment has been on a steady decline since the pandemic. The sector is hopeful that the Union Budget 2024 will include substantial measures to revive this critical segment and make homeownership more accessible to the masses.

Under the PMAY (Rural) scheme, one could avail of subsidies for converting 'kaccha' homes into 'pucca' ones, provided they fulfill the eligibility criteria. The government may also consider reintroducing a 100% Tax Holiday for affordable housing developers, previously granted under section 80-IBA in the Finance Act of 2016. This section offered significant tax relief on profits earned from developing and building affordable housing projects.

Expectations from Key Industry Leaders

Pradeep Aggarwal's Insights

Pradeep Aggarwal, Founder & Chairman of Signature Global (India) Ltd. & Chairman of ASSOCHAM National Council on Real Estate, Housing, and Urban Development, says, “The real estate sector anticipates several key reforms to drive growth and efficiency. Granting industry status to real estate will attract investments and streamline regulations. A simplified single-window clearance system will expedite project approvals, reduce delays, and enhance overall project execution. Revising the GST input tax credit rules will reduce property prices and increase transparency, while increasing the home loan interest rebate under Section 24 to ₹5 lakh will boost demand.”

“Additionally, increased budget allocations for urban infrastructure and lower stamp duty rates for property transactions or waivers for first-time home buyers from stamp duty will stimulate real estate growth. Expanding the definition of affordable housing to include homes up to ₹75 lakhs with a larger carpet area of 90 sq. meters, along with the relaunch of the CLSS scheme or a similar scheme will further benefit homebuyers. These initiatives and reforms can play a crucial role in sustaining economic growth, creating jobs, and improving living standards, paving the way for India to become a developed nation by 2047.”

Anmoll D Shroff's Perspective

Anmoll D Shroff, Founder & CEO of Graanth Realty, adds, “Boosting the real estate sector with tax incentives, improved tax structures, and a single-window clearance policy will encourage further investment in the real estate sector from both foreign and domestic sources.”

“Additionally, tax reforms such as lower income tax for corporate and individual taxpayers, simpler tax laws, targeted incentives, and reduced GST rates on construction materials will stimulate construction activity and create a more conducive environment for real estate players. The overall impact of the aforementioned reforms will increase the funds available to taxpayers, empowering them to become more avid consumers of real estate and, eventually, contribute to more rapid economic growth for the country as a whole.”

Bhavesh Shah's Views

Bhavesh Shah, Joint Managing Director of Today Global Developers, feels that the sector is anticipating transformative changes as the real estate sector plays a pivotal role in the economy, significantly contributing to employment. The budget should consider measures to stimulate demand and promote sustainable growth in housing.

“Some of the key expectations include increased tax slabs, revised affordability caps, and various incentives. We align with the sector’s expectations of an expanded SWAMIH stress fund, the reintroduction of GST with an input tax credit, granting industry status, and offering perks for first-time homebuyers. Raising the cap on affordable housing from ₹45 lakh to ₹65 lakh will make incentives more accessible, as diverse locations demand different price caps rather than uniformity. Recognising changing investment dynamics, we also hope there is something for millennials and Gen-Z homebuyers,” Shah added.

Jash Panchamia's Comments

Jash Panchamia of Suraksha Group says, “Increasing tax slabs and revising affordability housing caps to make housing more accessible. Stakeholders are advocating for increasing the affordability limit of housing from ₹45 lakhs to ₹75 lakhs in metro cities, particularly in the MMR and NCR regions. Additionally, the reintroduction of the Credit-Linked Subsidy Scheme (CLSS) and better home loan rates can help affordable housing absorb faster. Tax incentives for first-time homebuyers and the push for industry status are also on the agenda.”

“These measures aim to stimulate demand and ensure sustainable growth for the sector. We anticipate supportive policies that will enhance its growth and sustainability. Streamlining GST to reduce costs and enhance affordability for homebuyers is crucial. Furthermore, relaxing FDI norms will attract foreign investments, fostering development and innovation within the luxury segment.”

Varun Sharma's Insights

Varun Sharma, Founder & MD of MVN Aero One, highlights the importance of increased deductions on home loan interest rates to improve accessibility to luxury homes, thereby stimulating demand and creating a robust market environment. These initiatives not only support the sector's growth objectives but also play a vital role in enhancing the overall economic landscape by generating employment opportunities and driving infrastructure development.

Manish Jaiswal's Perspective

Manish Jaiswal, Group COO of Eldeco, says, “With a focus on innovation and exclusivity, we expect policies conducive to sustainable luxury, potentially including incentives for eco-friendly designs and amenities. Streamlined regulations and targeted tax adjustments could further catalyse investment in this segment, elevating industry standards. This upcoming budget holds promise to redefine luxury living, empowering us to craft bespoke, aspirational homes that resonate with evolving consumer demands and expectations.”

Ashish Sharma's Comments

Ashish Sharma, AVP Operation at Brahma Group, says, "As we prepare for Union Budget 2024-25, the luxury housing sector anticipates policies favoring sustainable and innovative designs, potentially with incentives for eco-friendly amenities. Moreover, streamlined regulations and targeted tax adjustments could spur investment, raising industry standards. The real estate sector looks forward to reforms like granting industry status, a simplified clearance system, revised GST rules, and enhanced home loan interest rebates to ₹5 lakh will stimulate transparency and further increase demand. These measures are likely to be essential in shaping a future where growth is robust, investment-friendly, and inclusive, reflecting India's journey towards prosperity and development for all."

Current Market Scenario

The Indian housing sector has remained upbeat in 2024 to date, with housing sales and new launches reaching new peaks in the top 7 cities. Sales reached an all-time high of about 4.93 lakh units in FY23-24, while 4.47 lakh units were launched.

However, it is expected that this momentum must continue in the future as well, and the current growth trajectory is skewed towards mid-range and premium housing. Considering the specific housing needs of India’s lower-income groups, this momentum cannot rely solely on higher-priced homes while affordable housing continues to languish.