Revitalizing Affordable Housing: Real Estate Developers' Plea to Finance Minister
Real estate developers urge Finance Minister to implement key reforms to bolster affordability, invigorate the real estate market, and advance housing accessibility for a broader segment of the population.
Real Estate MarketAffordable HousingFinance MinisterBudget ReformsPradhan Mantri Awas YojanaReal Estate NewsJul 18, 2024
According to Anarock Property Consultants, the share of affordable housing in residential sales has dropped from 38% in 2019 to 20% in 2023, underscoring the need for urgent reforms. To address this, developers are advocating for the reinstatement of incentives like the Credit-Linked Subsidy Scheme (CLSS) under the Pradhan Mantri Awas Yojana (PMAY) and providing 100% tax holiday benefits to revive this segment.
Revising the definition of affordable housing to reflect city-specific dynamics is also crucial. In cities like Mumbai, where affordability thresholds are insufficient, adjusting pricing benchmarks would ensure broader access to benefits such as lower GST rates and government subsidies. Sanjay Dutt, Managing Director and CEO at Tata Realty & Infrastructure, suggested that in Mumbai, properties valued between INR 50 lakh and INR 75 lakh should be considered for affordable housing.
Niranjan Hiranandani, Managing Director at Hiranandani Group, proposed an even higher value cap of INR 1 crore for metro cities that have experienced muted demand-supply scenarios. He also advocated for the removal of hindrances related to the 80-90% floor area ratio (FAR) and the payment of tax on profits via alternate minimum tax (AMT) or minimum alternate tax (MAT).
Currently, affordable housing is defined as a flat or house with a carpet area up to 90 square metres in metros and towns, and 60 square metres in major metros, or valued up to INR 45 lakh, or both. Pradeep Aggarwal, Founder and Chairman of Signature Global (India), supported expanding the definition of affordable housing to include homes worth up to INR 75 lakh with a larger carpet area. He believes that relaunching the CLSS or a similar scheme would significantly benefit homebuyers.
Anarock Property Consultants is a leading real estate consulting firm in India, providing expert insights and analysis on the residential and commercial property markets. Tata Realty & Infrastructure is a prominent real estate developer in India, with a focus on creating sustainable and accessible housing solutions. Hiranandani Group is a well-established real estate developer in India, with a diverse portfolio of residential and commercial projects. Signature Global (India) is a leading real estate developer in India, specializing in affordable housing solutions.
Information The Indian real estate market has experienced significant growth in recent years, driven by the demand for housing and commercial spaces. However, the affordable housing segment has struggled due to high interest rates, decreased affordability, and lack of incentives. The government has introduced several initiatives to promote affordable housing, including the Pradhan Mantri Awas Yojana (PMAY) and the Credit-Linked Subsidy Scheme (CLSS).
Frequently Asked Questions
What is the current definition of affordable housing in India?
Currently, affordable housing is defined as a flat or house with a carpet area up to 90 square metres in metros and towns, and 60 square metres in major metros, or valued up to INR 45 lakh, or both.
What is the Credit-Linked Subsidy Scheme (CLSS)?
The CLSS is a government scheme that provides subsidies to homebuyers in the affordable housing segment.
Why are real estate developers advocating for an increase in the income tax deduction for home loan interest?
Developers believe that increasing the income tax deduction for home loan interest from INR 2 lakh to INR 5 lakh would make housing more affordable for a broader segment of the population.
What is the share of affordable housing in residential sales in 2023?
According to Anarock Property Consultants, the share of affordable housing in residential sales has dropped to 20% in 2023.
What is the proposed value cap for affordable housing in metro cities?
Niranjan Hiranandani, Managing Director at Hiranandani Group, proposed an even higher value cap of INR 1 crore for metro cities that have experienced muted demand-supply scenarios.
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