Real estate stock investors and home buyers, both existing and potential, would be keenly tracking the Union Budget 2025 sops for any sops with regards to home loan interest deduction and price cap revision in the affordable housing segment. Market participants are even expecting re-introduction of Credit-Linked Subsidy Scheme (CLSS) under PMAY for affordable housing and are seeking an implementation of a long-standing demand of 'industry' status for the sector.
Amnish Aggarwal of PL Capital said he expects price revision in affordable housing segment to align with rising development costs, as the current price cap of Rs 45 lakh is considered unrealistic in many metro cities. He seeks teh re-introduction of Credit-Linked Subsidy Scheme (CLSS) under PMAY. The CLSS, which earlier provided subsidies for affordable housing, has been discontinued.
Aggarwal said he also expects an increase in the tax deduction limit on home loan interest from current Rs 2 lakh to make homeownership more affordable.
Besides, granting industry status to the real estate sector could unlock access to various benefits and boost investment, he said.
Sauvik Banerjjee, MD & CEO of Ziki said there’s been a long-standing demand for an increase in the tax rebate for housing loans, currently capped at Rs 2 lakh per annum.
"The sector has also been advocating for industry status for some time, and if granted, it could lead to streamlined regulations and improved access to capital. Apart from that, the cap on affordable housing should be ideally raised to Rs 75-80 lakh from Rs 45 lakh. The government is expected to introduce targeted tax incentives for developers who embrace sustainable building practices."
Ravi Singh, Senior Vice-President (Retail Research) at Religare Broking said the upcoming 2025 Budget is expected to include significant support for the real estate sector, with calls for industry status, stamp duty rationalisation, and incentives for affordable housing. Key expectations include revising the thresholds for the Pradhan Mantri Awas Yojana and enhancing tax deductions for home loan interest.
"The real estate sector is a key focus area for the government, particularly in terms of creating jobs, boosting economic activity, and promoting affordable housing. In the past, the government has introduced several measures to provide relief to the sector, and we can expect continued focus on affordable housing and infrastructure development in the upcoming Budget 2025," said Ajay Garg, CEO, SMC Global Securities
Manish Chowdhury, Head of Research, StoxBox said the rising cost of raw materials, increasing land cost and outdated definition of affordable homes especially for metros are the major predicaments which are making developers shy away from the affordable housing segment.
"A revision to the affordable housing bracket in terms of size and price based on specific city dynamics is crucial for reviving fortunes of the segment. Additionally, we believe that incentives on the taxation front for homebuyers, subsidies to developers and industry status to the segment would be important triggers. We expect the upcoming budget to unveil measures, especially simplified regulations and some incentives, to attract foreign investments into the commercial real estate sector," he said.
From a budget perspective, Chowdhury remain positive across the real estate value chain and has Oberoi Realty Ltd, PNB Housing Finance Ltd, and AAVAS Financiers Ltd among its top picks.
Siddharth Oberoi of Prudent Equity said the luxury real estate sector has experienced significant growth in the post-COVID era, largely driven by market dynamics without substantial external intervention.
"However, the mid- to affordable housing segment continues to face challenges, with the sector remaining under pressure for the past 3- 5 years. The government should consider measures such as reducing stamp duty, increasing interest exemption limits, and providing greater incentives to developers. These steps could help alleviate the stress on affordable housing and support broader housing market recovery," he said.