Real Estate Industry Urges Policy Support for Affordable Housing in 2026 Budget

As the Union Budget 2026 approaches, the real estate industry is urging the government to implement urgent policy support to revive affordable housing and bolster rental housing. Industry leaders warn that growth across the sector is becoming increasingly uneven, with luxury housing thriving while affordable housing faces significant challenges.

According to Anuj Puri, Chairman of ANAROCK Group, “India's housing story remains strong on the surface but is structurally imbalanced underneath.” Puri noted that in 2025, new home sales volumes fell by 14 percent, yet the sale value rose by 6 percent to nearly 6 lakh crore. This disparity indicates that while luxury housing is thriving, affordable housing is under significant stress. Puri emphasized that the Budget 2026 must continue to accelerate last-mile urban infrastructure, which would further boost real estate development.

Puri also called for the reintroduction of the 100 percent tax holiday under Section 80-IBA. He argued that this incentive had previously played a crucial role in increasing affordable housing launches and developer participation. “We also feel that Budget 2026 should redefine affordable housing to reflect the market reality. A 45-lakh price cap no longer reflects real ground realities. The affordable housing threshold needs to be raised to at least 95 lakhs for Mumbai and 75 lakhs for other major cities while retaining the size norms,” Puri added.

Niranjan Hiranandani, Chairman of NAREDCO (National Real Estate Development Council), stressed the importance of making rental housing a central pillar of the 'Housing for All' vision. “We strongly urge the removal of the stringent conditions under Section 80 IBA(6)(da) of the Finance Bill and recommend extending the benefit period for affordable rental housing projects to at least five years. Further, rental income from properties held as stock-in-trade should be exempt from taxation for five years after construction completion, recognizing the long-term nature of these investments,” Hiranandani said.

On the issue of taxation, Hiranandani highlighted concerns over the current stamp duty mechanism based on circle or ready reckoner rates, which often overburdens buyers and sellers. He also flagged the disallowance of set-off of losses against income from house property, noting that this discourages individual investment in rental assets.

Anshuman Magazine, Chairman and CEO for India, South-East Asia, Middle East, and Africa at CBRE, emphasized the need for Budget 2026 to deepen housing affordability and boost consumption. “Strengthening rental housing policies and providing clarity on the long-term framework for urban redevelopment may also help address supply gaps in high-density cities. Faster project approvals through single-window clearances, coupled with incentives for sustainable and green construction, would improve project viability and investor confidence,” Magazine said.

Moreover, Magazine suggested that as more multinational corporations (MNCs) look at India as a GCC (Global Capability Center) hub, the government should focus on skilling, especially in fast-growing fields like AI and Machine Learning (ML).

Pyush Lohia, Director at Lohia Worldspace, highlighted the importance of policy stability, infrastructure-led capital expenditure, and continued personal income tax rationalization. “Continued rationalization of personal income tax is expected to ease the burden on the middle class and boost disposable incomes. From a business standpoint, regulatory clarity and infrastructure-led capital expenditure, especially in urban development, logistics, and housing, will be crucial for driving employment and investment,” Lohia said.

He further added, “Support for MSMEs through easier credit access and GST simplification will further strengthen economic momentum. Additionally, incentives for green construction, renewable energy, and water conservation can promote sustainable growth.”

Industry leaders agree that a balanced Union Budget 2026, which addresses the needs of affordable and rental housing, could be critical to restoring broad-based growth in the real estate sector. With the right policy measures, the industry can overcome its current challenges and contribute significantly to India's economic development.