Real Estate Sector's Expectations from Budget 2025: Focus on Affordable Housing and Tax Relief for Homebuyers

As Finance Minister Nirmala Sitharaman prepares to present Budget 2025, the real estate sector is eagerly anticipating key measures aimed at boosting affordable and middle-income housing. Industry stakeholders are advocating for a broader definition of affordable housing, increased tax benefits for homebuyers, and incentives for developers to promote the construction of budget-friendly homes.

Real estate experts emphasize the need for more tax sops for both homebuyers and developers to stimulate affordable housing projects. One of the major demands is raising the deduction limit for home loan interest payments from the current ₹2 lakh to ₹5 lakh per year. Such a move could significantly boost housing demand, particularly in the affordable housing segment.

Boost to Affordable Housing

The sector is calling for increased budgetary support and incentives to make housing more accessible, as the current market trend is heavily skewed towards luxury and premium homes. Experts argue that the government must address the specific housing needs of India's middle class, ensuring that affordable housing is not sidelined.

Anuj Puri, Chairman of Anarock, pointed out that the current criteria for affordable housing—based on size, price, and buyer income—are outdated and need urgent revision. While the 60 sq. m. carpet area cap is reasonable, the ₹45 lakh price limit is unrealistic, especially in high-cost cities like Mumbai. Experts suggest increasing the cap to ₹85 lakh in Mumbai and ₹60-65 lakh in other metro cities to better reflect market conditions. Such revisions would allow more properties to qualify as affordable housing and help buyers access benefits like lower GST rates and government subsidies.

According to the Ministry of Housing and Urban Affairs, affordable housing is defined by property size, price, and buyer income. In non-metropolitan cities, affordable housing includes homes with a carpet area of up to 90 sq. m. and valued at ₹45 lakh or less, while in major cities, the cap is set at 60 sq. m. and ₹45 lakh. However, these definitions are considered outdated by experts who are pushing for adjustments to align with current market realities.

Tax Relief for Homebuyers

In addition to revising affordable housing definitions, the real estate sector is calling for greater tax relief for homebuyers, including higher deductions on home loan interest and principal repayment. These measures are seen as critical to making homeownership more attainable and stimulating demand in the housing market.

As Budget 2025 approaches, the real estate sector hopes that the government will prioritize these changes, helping to revitalize the affordable housing segment and address the growing needs of India’s middle-class homebuyers.