Budget 2023: What the realtors want from the government

New Delhi Dec 19: Realtors body CREDAI today, in its pre-Budget wish list, has sought an increase in the deduction limit on home loan interest to ₹ 5 lakh from the current ₹ 2 lakh in view of hardening of mortgage rates since May.

The interest rates on home loans have gone up by around 2 percentage points in the last seven months, to around 8.5 per cent following the hike in repo rates by 225 basis points since May.

CREDAI noted that EMIs (Equated Monthly Instalments) on home loans have gone up because of a rise in mortgage rates.

Hence, the association said there is a "compelling need to increase the existing limit of ₹ 2 lakh on exemption of interest paid on home loans to at least ₹ 5 lakh." This would not only give some extra disposable income in the hands of middle-income homeowners but would also attract prospective homebuyers to buy a home, it added.

CREDAI President Harsh Vardhan Patodia said: "Our recommendations are focused on sustaining the current growth in the sector, boosting demand and exemptions for homebuyers. The real estate sector can add millions of livelihoods in a short time and significantly contribute to GDP." He noted the continuous hike in key interest rates might cause short-term turbulence in overall housing demand.

"The sector has begun to gradually recover across key property markets, primarily driven by end-users. However, repeated rate hikes may have an impact on the interest-sensitive sector," Patodia said.

Moreover, CREDAI suggested that the price cap of ₹ 45 lakh on units to qualify as affordable housing needs to be revised as there have been substantial changes in the prices of various construction raw materials, labour costs and overall construction costs, news agency PTI reported.

To boost demand, CREDAI urged the government to incentivise homeowners by exempting 100 per cent of the rental income up to ₹ 20 lakh per annum. This would encourage people with disposable incomes to invest in properties for renting purposes.

The Confederation of Real Estate Developers' Associations of India (CREDAI) represents over 13,000 private developers across 221 city chapters in 21 states.

Among other pre-budget demand from industry players, Pradeep Aggarwal, Founder & Chairman of Signature Global, said, "keeping in view high inflation and significant rise in borrowing cost in the last few months, there is an urgent need of tax sops, especially for home buyers in affordable and mid-segment housing, to overcome the financial hardship." He said the government should enhance the deduction limit against interest payment on home loans.

Subhankar Mitra, Managing Director of Advisory Services, Colliers India, said there is a need to give a further push for affordable housing. "Any institutional support mechanisms for the stalled projects would also be a timely intervention," he added.

Piyush Bothra, Co-founder and CFO of Square Yards, said the price cap of ₹ 45 lakh limit for affordable housing should be increased to ₹ 80 lakh in metro cities and 60-65 lakh in non-metro cities, so that more people can take benefits of lower GST rates, government subsidies and tax deduction benefits on home loans.

Property consultant Anarock Chairman Anuj Puri too said the ₹ 2 lakh tax rebate on housing loan interest under Section 24 of the Income Tax Act needs to be hiked to at least ₹ 5 lakh. "This will add momentum to housing demand, particularly in the affordable segment," he said.