President Shekhar Patel adds that CREDAI will keep pushing for a new definition of affordable housing

CREDAI president Shekhar Patel said that real estate agents will keep working with the government on important issues related to affordable housing, such as changing the definition.

According to Shekhar Patel, head of the Confederation of Real Estate Developers' Associations of India (CREDAI), the real estate industry had great hopes for Budget 2026, especially for more support for affordable housing. However, these hopes were not satisfied. Patel told HT Real Estate that the developers' group will keep talking to the central government about important issues related to affordable housing, such as changing the definition by doing rid of the ₹45 lakh price restriction.

"We had high hopes for the Budget when it came to real estate, especially affordable housing, but they haven't been met." "Affordable housing is for the industry, and especially for the lower middle class and middle class people," Patel said while addressing at a CREDAI-organized reforestation event in Nashik on February 7. "But we will keep working to make the government understand this."

For nine years, the definition of affordable housing has not altered.

Patel says that CREDAI is talking to the government and NITI Aayog about three to four important concerns, one of which is affordable housing. The definition, which came out in 2017, says that units can't be bigger than 60 square meters in metro cities and 90 square meters in non-metros, and they can't cost more than ₹45 lakh. For nine years, homes that cost more than ₹45 lakh have been taxed at 5%, while those that cost less than that have been taxed at 1%.

"We are stating that this definition should not have a limit of ₹45 lakh. We think that in India, the size of a house, not the price, determines what is affordable housing in any state. Patel stated, "The reason is that inflation goes up every year. Even today, if you raise the cap from ₹45 lakhs to ₹65 lakhs or ₹70 lakhs, the same problem will happen again in five years."

CREDAI wants a credit guarantee program for affordable housing that works like MSME

Patel says that there should be a credit guarantee program for affordable housing similar to the one that is given to MSMEs. The problem is that, for example, the middle class and lower middle class acquire a loan based on their income records. But what if they need a loan of Rs. 30 lakhs, are getting a loan of Rs. 20 lakhs, and plan to buy a house for Rs. 40 lakhs? The bank won't issue them a loan since they don't have adequate paperwork for this. Because of this, they have to go to a private lender or a non-bank financial company (NBFC) to acquire a loan. He indicated that the loan there is between 14% and 18%.

Ratio of affordable housing may fall below 10%

Patel said that cheap housing made up about half of total housing supply and demand in 2022, which helped a lot of purchasers. But because of the present definition, its proportion has continuously gone down, dropping to roughly 18% last year. He said that if the definition stays the same, the percentage could drop below 10%, which would mean that there wouldn't be enough supply or demand for affordable housing.

We also want the homebuyer who pays for the loan to pay, which costs them money. But if I buy a house in the company's name and pay the interest, I get a deduction on my income tax. But when I buy a house in my name, I have to pay interest, which I can't deduct. Before, I used to collect Rs. 2 lakh under the old system, but most individuals have switched to the new system, where interest is not tax-free. He told HT Real Estate, "We think that interest should be seen as an expense and that you should be able to deduct it from your income for tax purposes."

Source: Hindustan Times