Union Budget should provide special incentives for affordable housing segment
Affordable housing should receive special attention in the upcoming Union Budget as the Finance Minister will table a full budget in July
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Bengaluru, 21 June: Affordable housing should receive special attention in the upcoming Union Budget as the Finance Minister will table a full budget in July.
According to consultancy firms, while premium and medium-segment housing have done well in recent years, affordable housing is languishing owing to the lack of special incentives. Thus, the upcoming budget should come up with measures to ease the housing problem of people with low income.
According to ANAROCK Research, the sales share of affordable housing reduced significantly after COVID-19 - from over 26 per cent in 2022 and over 38 per cent in 2019 to around 20 per cent in Q1 2024. Due to low demand, this segment’s share of the overall housing supply in the top seven cities also fell to 18 per cent in Q1 2024, from nearly 40 per cent in 2019.
“Many interest stimulants previously extended to buyers and developers of affordable housing have expired in the last two years. This important segment must be revived with high-impact measures like tax breaks - for developers, so that they will focus more on affordable housing, and for buyers to improve affordability,” Anuj Puri, Chairman of ANAROCK Group said in a report.
“To boost supply and incentivise developers to build more affordable housing, the government can re-introduce the ‘100 per cent tax holiday’ benefit they previously enjoyed under section 80-IBA in the Finance Act, 2016. This section provided for major tax relief on the profits earned from developing and building affordable housing projects,” he added.
The consultancy firm also said that the definition of affordable housing should be tweaked.
“The government must seriously reconsider revising the pricing of homes within the affordable housing budget, taking into consideration city-specific market dynamics. As per the current definition, the size of units at 60 sq. m. carpet area is appropriate. However, prices of units (up to INR 45 lakh) are not viable across most cities,” Puri added.
