Realtors Demand Reforms in Budget for Housing Affordability
As the Union Budget 2025-2026 (FY26) approaches, the Indian real estate industry is voicing its expectations for significant reforms aimed at addressing long-standing issues in housing affordability, project delays, and high construction costs. Leading developers and industry experts, including the CREDAI-NCR, Anarock, Raheja Developers, and Kanodia Group, have outlined their proposals to help revive the sector and make homeownership more accessible for the average Indian.
One of the most pressing demands from the sector is the rationalisation of stamp duty, which has escalated significantly in recent years, causing a considerable financial strain on homebuyers. Manoj Gaur, President of CREDAI-NCR and Chairman of Gaurs Group, highlighted that the burden of high stamp duty not only deters potential buyers but also inflates overall housing costs. Gaur advocates for an increase in the current deduction limit under Section 80C of the Income Tax Act from ₹1.5 lakh to ₹5 lakh, which would help make homeownership more affordable for a wider segment of the population. He also recommended revising the affordable housing criteria to shift the focus from price caps to carpet area, suggesting that 60 square metres in metropolitan cities and 90 square metres in non-metro areas should be the new benchmark.
The industry also seeks the reintroduction of the 100% tax holiday for affordable housing projects approved before March 31, 2022, which would provide a much-needed boost to the government’s “Housing for All” mission. Mohit Kalia, Vice President of Sales at Raheja Developers, emphasised the need for government-backed policy changes that could help sustain the momentum in the commercial real estate sector, including a rationalisation of interest rates to fuel demand and the introduction of a single-window clearance system to expedite project approvals. Such measures would significantly improve the overall real estate ecosystem and attract more investments.
In addition to these measures, there are calls for revising the Goods and Services Tax (GST) on construction materials. Delhi-NCR’s Kanodia Group urges the government to reduce the GST on these essential materials to lower project costs and empower developers to embark on new ventures. Gautam Kanodia, Founder of the Kanodia Group, pointed out that lowering project costs would not only benefit developers but also make homes more affordable for the end consumer. This is especially crucial for developers struggling with the rising cost of raw materials, which has hindered many residential projects in recent years.
A significant concern highlighted by industry players is the decline in affordable housing sales. Anarock data reveals that the share of affordable housing sales dropped from 38% in 2019 to just 18% in 2024. Anuj Puri, Chairman of Anarock Group, believes that the Union Budget presents a critical opportunity to reverse this trend, particularly through the reintroduction of the credit-linked subsidy scheme (CLSS) under the Pradhan Mantri Awas Yojna (PMAY). This would offer subsidies to economically weaker sections (EWS) and encourage first-time buyers to invest in affordable homes, which is essential for the recovery of the residential segment. Furthermore, there is a growing consensus that the definition of affordable housing needs to be updated, particularly in high-cost cities like Mumbai, where the current price caps are no longer practical.
From a sustainable development perspective, the real estate sector is also calling for greater focus on eco-friendly policies. Industry leaders believe that the budget should incentivise the construction of green buildings, promote energy-efficient technologies, and introduce tax breaks for developers adopting sustainable practices. As urbanisation accelerates, there is a growing need to develop infrastructure that supports sustainability, reducing the sector’s carbon footprint while meeting the increasing demand for housing. Policies aimed at reducing the environmental impact of real estate developments would not only align with global sustainability goals but also enhance the quality of life in rapidly expanding urban centres.
The real estate sector remains confident that with the right interventions in the upcoming budget, the industry can regain its momentum and contribute significantly to India’s economic growth. As institutional funding in real estate reached a record $6.5 billion in 2024, investor confidence is high, but the right policies are crucial to ensure that projects are completed on time and that affordable housing remains a priority. As India moves forward, a more streamlined approach to real estate development, combined with pro-growth policies, could provide the push the industry needs to unlock its full potential.
