The Confederation of Real Estate Developers’ Associations of India (CREDAI) has submitted its recommendations for the Union Budget 2026–27, urging the government to introduce targeted policy measures to improve housing affordability, expand access to finance, and ensure sustained supply across residential segments.

The apex body has emphasised that these recommendations are fully aligned with the Government’s priorities, including Housing for All, urban rejuvenation, and improving ease of living, while addressing persistent structural challenges in affordability, finance access, taxation, and regulatory framework that continue to impact the real estate sector.

The housing and real estate sector continues to play a significant role in urban development and employment generation, with strong linkages across construction materials, manufacturing, logistics, and financial services. CREDAI has highlighted the need for targeted interventions to restore affordability, unlock pent-up demand, and ensure sustained supply across residential segments in line with rising urbanisation and the vision of Viksit Bharat.

CREDAI’s key recommendations focus on redefining the affordable housing framework to reflect current market realities, enhancing access to formal housing finance for underserved segments, rationalising tax deductions and GST rates to stimulate demand and improve viability, and establishing a dedicated mission for rental housing to address urban migration needs. These measures are designed to address structural constraints affecting both housing demand and supply, improve alignment between fiscal and regulatory measures, and support the orderly and sustainable growth of India’s residential real estate sector.

Key Highlights of Recommendations

Updating Affordable Housing Parameters for Current Market Realities

The current affordable housing definition, unchanged since 2017, restricts units to 60 sq. m. in metros and 90 sq. m. in non-metros, with a INR 45 lakh value cap that no longer aligns with escalated land and construction costs. Multiple inconsistent definitions across schemes (PMAY, RBI, NHB, RERA) create administrative complexity. CREDAI proposes revising carpet area norms to 90 sq. m. in metros, and 120 sq. m. in non-metros; removing the value threshold entirely; and harmonising definitions with the Harmonized List of Infrastructure Sub-sectors. This area-based approach will expand viable supply in urban centres, simplify compliance, and support greater employment and economic activity.

Rationalising Housing Loan Interest Deduction Limits

The existing INR 2 lakh cap on housing loan interest deduction has remained unchanged for over a decade and no longer reflects today’s higher property prices, loan sizes, and interest rates. In most urban markets, the annual interest outgo for middle-income homebuyers exceeds INR 4–6 lakh, significantly diluting the benefit. CREDAI recommends removing the cap for the first self-occupied residential property and extending the deduction to the new tax regime to ensure parity. Appropriate safeguards—such as limiting the benefit to owner-occupied and first homes—can prevent misuse. This reform will improve affordability, enhance disposable income, stimulate housing demand, and align fiscal incentives with the objective of promoting home ownership.

Establishing a Credit Guarantee Scheme for Affordable Housing

Low-income and informal-sector households face barriers to formal housing finance due to inadequate documentation, forcing reliance on high-cost private lenders. CREDAI proposes a dedicated Credit Guarantee Scheme, modelled on CGTMSE, covering affordable housing loans (up to 80–90% of property value) and home improvement loans. Given the low NPA profile of housing loans, this mechanism will de-risk lenders, expand credit outreach to EWS/LIG segments, and promote financial inclusion with negligible fiscal exposure. The proposed scheme will be self-sustaining, with costs recovered through a nominal guaranteed fee from borrowers and will therefore entail no upfront fiscal burden on the government budget.

Reforming GST Rates for Housing and Construction

The prevailing GST structure, including dual rates and high input taxation, has increased project costs and constrained new supply, particularly in urban markets. CREDAI advocates reduced GST rates on residential units and works contracts, alongside streamlined input tax credit provisions. This rationalisation will lower effective costs for developers and buyers, improve project viability, encourage higher transaction volumes, and generate increased revenue through expanded sectoral activity.

Launching a National Rental Housing Mission

With rapid urbanisation driving migrant inflows, the organised rental housing segment remains underdeveloped. CREDAI recommends establishing a National Rental Housing Mission to develop large-scale affordable rental stock in tier-1 and tier-2 cities through fiscal incentives for developers, tax relief for tenants, and institutional participation. This initiative will formalise the rental market, curb informal settlements, support workforce mobility, and create a sustainable investment class without significant budgetary outlay.

Shekhar Patel, President, CREDAI, said:“Housing remains a critical engine of economic growth, employment generation, and urban transformation. To keep pace with India’s rapid urbanisation, it is vital to strengthen affordability, expand access to formal finance, and develop a robust rental housing ecosystem. Targeted measures—such as redefining affordable housing parameters, enhancing interest deductions, introducing a Credit Guarantee Scheme, rationalising GST, and establishing a National Rental Housing Mission—will unlock investment, reinforce homebuyer confidence, improve financial inclusion, and enable sustained housing supply, while supporting affordable rental options in urban centres for lower-income groups and contributing to improved living conditions and the gradual reduction of slums. Together, these reforms can shape more inclusive, well-planned urban growth, aligning housing outcomes with the broader aspirations of Viksit Bharat 2047.”

CREDAI stated that a coordinated, policy-driven approach addressing both demand-side and supply-side challenges would strengthen homebuyer confidence and support the sustainable development of the housing and real estate sector.