NAREDCO Seeks Industry Status and Higher Home Loan Deduction for Real Estate Sector

The National Real Estate Development Council (NAREDCO) has made a strong case for the real estate sector to be granted industry status and for a significant increase in the home loan interest deduction limit in the upcoming budget. These demands were articulated by NAREDCO Chairman Niranjan Hiranandani and President Parveen Jain during a recent press conference in New Delhi.

NAREDCO is calling for the government to enhance the deduction limit for interest on home loans to Rs 5 lakh from the current Rs 2 lakh. This move is seen as crucial to stimulate the growth of the real estate sector, particularly in the affordable housing segment. Hiranandani emphasized the need to ensure 'Housing For All' and advocated for housing to be given the same importance as other infrastructure sectors.

The association has also proposed a change in the definition of affordable housing. Currently, homes costing up to Rs 45 lakh are considered affordable, but NAREDCO suggests that this limit should be increased to Rs 75-80 lakh. This adjustment would make more homes eligible for the lower 1% GST rate, which is currently applicable to affordable housing.

Hiranandani highlighted that while the government has taken several measures to support the real estate sector, more needs to be done, especially for the affordable housing segment. He suggested that the government should utilize its own land for the development of affordable and mid-income housing. This would not only increase the availability of affordable homes but also optimize the use of government resources.

Parveen Jain, NAREDCO President, further emphasized the importance of increasing the limit for deduction of interest on home loans to Rs 5 lakh for self-occupied properties. Jain also called for the promotion of rental housing by providing incentives to real estate developers. He pointed out that the current rental yield in the housing segment is very low, ranging from 1% to 3%, making it unviable for developers to invest in rental housing.

To address this issue, Jain suggested that the government could offer tax incentives and other facilities to realtors to encourage the development of rental housing. This would help to create a more balanced and sustainable housing market, catering to the needs of different segments of the population.

NAREDCO has been advocating for industry status for the real estate sector for a long time. According to Jain, this status would enable the sector to access cheaper loans for all inputs, including land and raw materials used in construction. He highlighted the significant contribution of the real estate sector to India's GDP and employment creation, emphasizing that it is high time the government recognizes the sector's importance by granting it industry status.

The real estate sector is projected to reach a value of USD 1 trillion by 2030, and NAREDCO believes that the proposed measures would help to accelerate this growth. By providing industry status and increasing the home loan interest deduction limit, the government can create a more favorable environment for the real estate sector, ultimately benefiting both developers and homebuyers.

In conclusion, NAREDCO's demands reflect the need for comprehensive policy changes to support the real estate sector, particularly in the areas of affordable housing and rental housing. These measures, if implemented, could have a significant positive impact on the sector's growth and contribute to the broader goal of 'Housing For All'.