CREDAI Pushes for Major Housing Reforms in Budget 2026 to Boost Affordability

One of the primary focuses of the submission is the immediate need to redefine the affordable housing framework, which has remained unchanged since 2017. Currently, the definition restricts affordable units to a Rs 45 lakh value cap and specific square footage that CREDAI argues no longer reflects the reality of escalated land and construction costs.

To fix this, the body proposes increasing carpet area norms to 90 square meters in metros and 120 square meters in non-metros, while removing the price threshold entirely. This shift toward an area-based definition is intended to expand the supply of viable housing in urban centres and simplify the administrative complexity caused by inconsistent definitions across various government schemes.

To directly benefit homebuyers, CREDAI is advocating for a significant overhaul of housing loan interest deduction limits. The current Rs 2 lakh cap has been static for over a decade, even as property prices and interest rates have climbed.

In most major cities, middle-income earners now face annual interest payments between Rs 4 and Rs 6 lakh, making the existing tax benefit negligible. The association recommends removing this cap for first-time, self-occupied homes and extending these deductions to the new tax regime to ensure all taxpayers are treated fairly. This reform is expected to improve disposable income and encourage more citizens to transition from renting to home ownership.

The recommendations also address the difficulties low-income and informal-sector households face when trying to secure formal bank loans due to a lack of documentation. CREDAI has proposed the creation of a dedicated Credit Guarantee Scheme for affordable housing, which would de-risk lenders and expand credit to underserved segments. This self-sustaining model would be funded through nominal fees from borrowers, meaning it would place no upfront fiscal burden on the national budget while helping to bring more people into the formal financial system. Additionally, the body is pushing for a rationalisation of GST rates on construction and residential units to lower effective costs for both developers and buyers.

Finally, looking toward the future of urban migration, CREDAI has called for the launch of a National Rental Housing Mission to develop organised rental stock in major cities through fiscal incentives and tax relief.

Shekhar Patel, President of CREDAI, highlighted the importance of these combined efforts, stating, "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." He further noted that these reforms would "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."

- ANI