In the upcoming budget, CREDAI wants to raise the amount that can be deducted for house loan interest to Rs 5 lakh

In its pre-Budget wish list, the leading realtors' organisation CREDAI requested on Monday that the cap on home loan interest deductions be raised from the existing Rs 2 lakh to Rs 5 lakh due to the recent increase in mortgage rates.

Following the increase in repo rates by 225 basis points since May, the interest rates on house loans increased by around 2 percentage points to about 8.5% during the past seven months.

As a result of an increase in mortgage rates, CREDAI observed that EMIs (Equated Monthly Instalments) on home loans have increased.

It is therefore "compellingly necessary to extend the existing limit of Rs. 2 lakh on exemption of interest paid on housing loans to at least Rs. 5 lakh," according to the association. This would encourage potential homebuyers to purchase a property as well as give middle-class homeowners some extra disposable cash, it was stated.

Harsh Vardhan Patodia, president of CREDAI, said: "Our suggestions are geared toward sustaining the industry's existing growth, increasing demand, and providing homebuyers with exemptions. In a short amount of time, the real estate industry may create millions of new jobs and make a major contribution to GDP."

He warned that the ongoing increase in key interest rates could temporarily disrupt the housing market.

"Key real estate markets have seen a slow but steady recovery in the sector, mostly driven by end users. However, the interest-sensitive sector may be impacted by ongoing rate increases "added Patodia.

The price restriction of Rs 45 lakh on units to qualify as affordable housing should also be updated, according to CREDAI, as there have been significant changes in the pricing of labour, various construction raw materials, and overall building expenses. CREDAI advised the government to encourage homeowners by exempting 100% of the rental revenue up to Rs 20 lakh per year in order to increase demand.

As a result, it would be more appealing for those with extra cash to buy rental properties.

Over 13,000 private developers are represented by the Confederation of Real Estate Developers' Associations of India (CREDAI) in 221 city chapters throughout 21 states.

Among the pre-budget requests from participants in the business, According to Pradeep Aggarwal, the founder and chairman of Signature Global, "tax sops are urgently needed, especially for home buyers in cheap and mid-segment homes, to overcome the financial difficulty, given the high inflation and huge rise in borrowing costs in the recent few months."

He suggested that the government raise the threshold for home loan interest deductions.

Managing Director of Advisory Services at Colliers India, Subhankar Mitra, stated that there has to be more of a push on affordable housing. A timely intervention would also include any institutional support measures for the stalled initiatives, he continued.

The price cap of Rs. 45 lakh for affordable housing should be raised to Rs. 80 lakh in metro areas and to Rs. 60-65 lakh in non-metro areas, according to Piyush Bothra, co-founder and CFO of Square Yards. This will allow more people to benefit from lower GST rates, government subsidies, and tax deductions on home loans. Anuj Puri, the chairman of Anarock, a real estate consulting firm, agreed that the Section 24 tax credit of Rs 2 lakh on interest on housing loans should be increased to at least Rs 5 lakh. According to him, "this will accelerate home demand, particularly in the affordable segment."