Realty Sector Pushes for Tax Benefits and Rental Housing Growth
In a significant move ahead of the 2024 Union Budget, the real estate sector has called on the government to prioritise the expansion of rental housing and provide more substantial tax benefits for home loans. This appeal was made during a pre-Budget consultation meeting with Finance Minister Nirmala Sitharaman on Monday, where industry leaders, including Niranjan Hiranandani, Managing Director of Hiranandani Group and Chairman of the National Real Estate Development Council (NAREDCO), voiced their concerns.
Hiranandani, while addressing the gathering, highlighted the increasing need for a more balanced focus in the housing sector. “Until now, the conversation has predominantly centred around ownership housing. It’s high time we look at the critical issue of rental housing as well, which has been largely neglected,” he remarked. He stressed that providing affordable and quality rental options is crucial for meeting the demands of an increasingly mobile workforce and the growing urban population.
The real estate sector’s call for change follows the government’s previous initiatives, where Finance Minister Nirmala Sitharaman had announced plans in the last Budget to facilitate rental housing for industrial workers. This included provisions for dormitory-type accommodation to be developed under public-private partnerships, supported by viability gap funding. While this was a step in the right direction, the realty sector believes that more comprehensive measures are necessary to address the broader rental housing challenge across urban India.
From a financial perspective, the industry is urging the government to enhance tax benefits related to home loans. The current tax reliefs are deemed insufficient to incentivise both homebuyers and developers to address the growing housing demand, particularly in tier-2 and tier-3 cities. These changes could include higher deductions for home loan interest, which would encourage more people to take the step towards homeownership, thus easing the pressures on both the rental and ownership housing markets. Experts argue that increasing the scope of tax benefits would make home loans more accessible and affordable, especially for first-time homebuyers in the middle-income bracket.
Sustainability remains a central concern in the real estate sector’s plea. The lack of affordable rental housing and insufficient tax benefits not only hampers the growth of the realty sector but also exacerbates urban sprawl, leading to unsustainable development. If rental housing was given a larger focus, it could reduce the pressure on greenfield developments, promote higher-density living in urban centres, and significantly reduce commuting times, thereby lowering carbon footprints. This would also support the government’s larger goals of sustainable urbanisation as outlined in its Smart Cities Mission and the National Urban Transport Policy.
In conclusion, the real estate sector’s request to shift focus towards rental housing, coupled with the demand for enhanced tax benefits for home loans, represents a push for balanced, inclusive, and sustainable growth. As India continues to urbanise, the need for equitable solutions that provide access to both homeownership and quality rental accommodation becomes more pressing. By addressing these issues in the upcoming Budget, the government can foster a more resilient real estate market and contribute to the broader vision of a sustainable, inclusive, and prosperous India.
