Real Estate Sector Urges FM Sitharaman to Prioritise Affordable Housing in Budget 2026

As the Union Budget 2026 approaches, the Indian real estate industry has outlined a set of policy proposals aimed at reviving affordable housing demand and improving urban housing affordability, which has lagged behind growth in premium segments. Stakeholders are urging Finance Minister Nirmala Sitharaman to include targeted fiscal measures that can make homeownership more accessible for middle- and low-income families, while also strengthening the broader housing market.

A central recommendation from developers and industry bodies is to expand and update tax incentives related to home purchases. This includes calls to raise the home-loan interest deduction limit from the current ₹2 lakh to a higher threshold (such as ₹5 lakh), which would provide direct relief to urban homebuyers grappling with high borrowing costs and slow demand.

Industry groups have also proposed redefining the affordable housing category to reflect current market realities. The existing ₹45 lakh price cap and size limits were set years ago and now exclude many homes in fast-growing urban and Tier-II/III markets; raising these caps or adopting a uniform definition could unlock more supply eligible for incentives and subsidies.

In addition to buyer-focused reforms, the sector is seeking support for developers building affordable stock, such as reinstating tax breaks (like a lower income-tax rate or a revived Section 80-IBA incentive) and granting industry status to real estate to improve financing access. There are also calls for expanded rental housing policies and credit schemes that lower barriers for both renters and investor-suppliers of affordable units.