As the Union Budget 2026 draws near, real estate leaders are pressing the government for immediate action. They want to revive affordable housing and strengthen rental housing policies. These experts warn that sector growth is becoming increasingly uneven. Luxury developments are surging while affordable options struggle.
Structural Imbalance in Housing Market
Anuj Puri, chairman of ANAROCK Group, points out a troubling trend. India's housing story appears strong on the surface but faces structural issues. In 2025, new home sales volumes actually dropped by 14%. However, sales value climbed 6% to nearly Rs 6 lakh crore. This data clearly shows a luxury housing boom. Meanwhile, affordable housing remains under significant stress.
Key Recommendations for Budget 2026
Puri calls for several specific measures. He urges the government to accelerate last-mile urban infrastructure development. This move would boost overall real estate growth. He also recommends bringing back the 100% tax holiday under Section 80-IBA. This provision previously played a crucial role in encouraging affordable housing launches and developer participation.
Furthermore, Puri suggests updating the definition of affordable housing. Current price caps no longer reflect market realities. He proposes raising the threshold to at least Rs 95 lakh for Mumbai. For other major cities, he suggests a cap of Rs 75 lakh. Size norms should remain unchanged.
Focus on Rental Housing
Niranjan Hiranandani, chairman of NAREDCO, believes rental housing must become central to the 'Housing for All' vision. He proposes removing stringent conditions under Section 80 IBA(6)(da). He also recommends extending tax benefits for affordable rental housing projects to at least five years.
Hiranandani calls for exempting rental income from stock-in-trade properties from taxation. This exemption should last for five years after project completion. He recognizes the long-term nature of such investments.
Taxation Concerns
On taxation issues, Hiranandani highlights problems with the current stamp duty system. It often overburdens buyers and sellers. He also raises concerns about disallowing loss set-offs against house property income. This policy discourages individual investment in rental assets.
Broader Economic Recommendations
Anshuman Magazine, chairman and CEO for India, South-East Asia, Middle East, and Africa at CBRE, urges Budget 2026 to deepen housing affordability. He also emphasizes boosting consumption. Magazine recommends strengthening rental housing policies. He calls for a clear long-term framework for urban redevelopment. This framework would address supply gaps in high-density cities.
Magazine highlights several other needs:
- Faster project approvals through single-window clearances
- Incentives for sustainable and green construction
- A focus on skilling in high-growth areas like AI and ML
He notes that more multinational companies view India as a hub for Global Capability Centers. This trend makes skill development even more critical.
Policy Stability and Infrastructure
Pyush Lohia, director at Lohia Worldspace, stresses the importance of policy stability. He advocates for infrastructure-led capital expenditure. Continued personal income tax rationalization would support consumer confidence and long-term growth.
Lohia adds that support for MSMEs through easier credit access and GST simplification will strengthen economic momentum. He also recommends incentives for green construction, renewable energy, and water conservation. These measures would promote sustainable growth.
Industry Consensus
Industry leaders agree on a common point. A balanced Budget 2026 that addresses both affordable and rental housing could be decisive. Such a budget would revive broad-based growth in the real estate sector. The current trajectory favors luxury developments too heavily. Correcting this imbalance requires immediate government intervention.
The upcoming budget presents a crucial opportunity. Government action could reshape the housing landscape. Millions of Indians await affordable housing solutions. The real estate sector needs policies that encourage inclusive growth rather than just luxury expansion.
