Real estate sector expects policy reforms, push for affordable housing from the new government

Real estate sector expects policy reforms, push to affordable housing from the new government

With the results of 2024 Lok Sabha elections giving a majority to the National Democratic Alliance (NDA), real estate sector players expect tax reforms, a push to affordable housing and infrastructure development along with initiatives to simplify business operations from the next government.

They also want some provisions made to reduce the EMIs (equated monthly instalments) homebuyers have to pay on their loan and introduction of sustainability incentives for the sector.

G Hari Babu, national president, National Real Estate Development Council (NAREDCO), said the focus should be easing the loan burden, particularly for cheaper housing.

“The increase from 6.25 percent before COVID-19 to around 8.75 percent at present has made home loan EMIs very expensive. We urge the government to provide relief by offering lower interest rates for affordable housing loans. This can be achieved by setting the first Rs 20 lakh or Rs 25 lakh of a home loan at a 5 percent interest rate for the first five years,” he said.

Policy reforms

Related stories

Ashish Mishra

Prinicipal Correspondent|moneycontrol

• 
  Increased costs, extended timelines: How the new labour codes could impact the realty, infra sector
• 
  Signature Global lines up Rs 14,000 crore launches in FY26, open to opportunities in Noida
• 
  Hope returns for 3,000 families as NCLT approves ONE Group’s plan to revive Aquapolis project

Babu added that specific policy reforms are necessary to stimulate growth in the real estate sector, particularly in the affordable housing segment. “Raising the affordable housing limit from Rs 45 lakh to Rs 60 lakh would address challenges faced by builders and buyers. This change would help maintain the momentum in the affordable housing market,” he said.

Babu said that other reforms could include financial incentives for sustainable building practices and subsidies or tax breaks for developers focusing on affordable housing projects. This could involve tax incentives for green buildings, subsidies for using eco-friendly construction materials and policies that promote energy-efficient practices. These measures would help the sector meet its goal of becoming a net zero carbon industry by 2047.

Anuj Puri, chairman, ANAROCK Group, a real estate consultancy, said that the industry is looking towards a stable government that will ensure no interruptions in the ongoing schemes and investments into infrastructure development.

“The interim budget indicated that with the government’s policies unchanged, the mid-segment housing sector would witness targeted action and policy alignment that would lead to further growth of India's housing sector. With government continuity, we can look forward to a major boost for the affordable housing sector, this being a flagship scheme that had not fared well over the last term,” Puri said.

Also Read: Over 4.35 lakh housing units completed in 2023 across top 7 cities, 59% in NCR and Mumbai regions: ANAROCK

The mid-end (homes priced between Rs 40 lakh and Rs 80 lakh) and high-end (Rs 80 lakh to Rs 1.5 crore) segments together recorded sales of 76,555 units in the first three months of calendar 2024  which accounts for a share of nearly 59 percent of the total. The cumulative share supply for these segments in the same three months of 2019 was 47 percent, according to ANAROCK data.

The data showed that sales of affordable housing (homes priced under Rs 40 lakh) between January and March 2024 stood at 26,545 units, or just 20 percent of total sales. Concurrently, supply in this segment had also dropped from 44 percent in January-March 2019 to 18 percent in the same period of 2024.

Samir Jasuja, CEO and managing director of real estate consultancy PropEquity, said, “Reintroducing tax benefits that were previously available could be a significant step. For example, landlords could deduct their entire rental income against the interest paid on the property's mortgage. Restoring such benefits would encourage investment and boost overall property purchases.”

Business-friendly environment

Suraj Morajkar, managing director, Sun Estates Developers, said that the real estate sector emphasises the importance of policies that foster economic growth, innovation and a business-friendly environment.

“Key measures include tax reforms, infrastructure development and initiatives to simplify business operations. Stability in governance and a reliable regulatory framework are fundamental in creating a conducive environment for business expansion and investment. By prioritising the needs of the corporate sector, the government can drive economic development and generate opportunities for growth,” Morajkar said.

Also Read: Real estate sector pitches for industry status and lower interest rates

Sunil Sisodiya, founder, Geetanjali Homestate, said government policies hold  immense sway over the sector, shaping the landscape of growth and opportunity.

“We advocate for policies that foster economic vibrancy, innovation and a business-friendly ecosystem. Measures such as streamlined regulations and tax reforms propel the sector forward, amplifying the potential for expansion and investment. The recent election outcome instils confidence with expectations of sustained policy continuity and measures to bolster economic stability,” he said.

Aryaman Vir, CEO of WiseX, a platform that specialises in investments in office and other commercial spaces, said that now the polls are done with, policy stability is expected to drive growth and investor confidence in India's commercial real estate sector.

"We expect that post the government formation after the 2024 Lok Sabha election results, the real estate sector will continue to see a steady growth in new project launches, particularly in CRE (commercial real estate). Policies promoting business growth, infrastructure development and ease of doing business can lead to increased demand for commercial spaces," he said.