What Homebuyers Are Looking for in 2024?

Union Budget coinciding with elections, the homebuyers need not be concerned about vital inclusions. However, there might be a few changes to promote the continuity of current housing policies. 

The key point of focus in the housing aspect of the budget would be amplified affordability, easier real estate regulations, sustainable housing practices, and better trends in housing forecasts. 

• Affordable Housing–  Major tier 2&3 cities face distinct challenges in the housing market, and the current one-size-fits-all approach may unintentionally exclude a large segment of the population. Homebuyers are asking the Ministry of Housing and Urban Poverty Alleviation to revise its definition of affordable housing. They (homebuyers) are urging cost criteria overhaul to expand access to these projects. This would not only allow more people to become homebuyers but also modernize and mould the program according to the cost of living in the various Indian cities. 
• Rental Housing– Currently, many houses priced under ₹50 lakh remain vacant despite strong demand. The low rental yields do not justify the costs and it becomes difficult for owners to rent it out. The availability of affordable rental housing is the demand for every homebuyer. The solution? A practical tax incentive. Quoting Shishir Baijal, Chairman and MD of Knight Frank India, “The budget could introduce a 100% exemption for rental income up to Rs 3 lakh for houses costing up to Rs 50 lakh. This would incentivize investors to rent out properties and augment the supply of rental accommodation in the segment which is the most impacted by the housing shortage.” This initiative tackles two birds with one shot. It addresses the issue of unoccupied investment properties and motivates owners to participate actively in the rental market. Once the supply of affordable rental housing increases, the government can directly address the housing needs of low-income groups. It will also promote stability and inclusivity in the housing market. This practical approach signifies a shift towards recognizing rental housing as a vital component, offering greater flexibility and accessibility for a wider range of homebuyers. 
• Taxation Benefits in Housing– The existing Section 54 of the Income Tax Act, allows reinvesting long-term capital gains from selling a property into a new one to avoid taxes. Stakeholders propose to significantly increase the deduction for this reinvestment, potentially up to ₹5 lakhs. This could encourage people to view real estate as a valuable investment and incentivize buying a new home. Some proposals also recommend raising the tax deduction limit on principal repayment of home loans under Section 80C, currently capped at ₹1.5 lakhs. Additionally, increasing the existing interest exemptions under Sections 80EEA and 80EE for first-time homebuyers in affordable housing could further affect purchases. Some focus has also been kept on a unified GST rate on all construction raw materials. It’ll help to reduce property prices and increase transparency in construction. Homebuyers have also advocated for the reinstatement of the 100% tax holiday for affordable housing developers under SEC 80IBA, which expired in 2021-22. Reintroducing cost breaks for developers could lead to better deals for homebuyers, including rebates and attractive schemes. 
• Industry Status: A potential game changer for real estate would be industry status. This follows the positive impact of the Real Estate Regulation and Development (RERA), which has brought welcomed accountability to developers. Industry status goes beyond symbolism. It is seen as a key to unlocking better financing options for real estate projects. Easier access to capital could be a turning point for the sector, raising hopes for more affordable housing options. But the benefits extend beyond finance. Industry status could also act as a catalyst for growth in the construction industry, a major employer, especially for unskilled and casual labourers. This aligns with national goals of “housing for all” and job creation, making industry status a powerful driver for overall growth in the real estate sector, as seen by homebuyers. Investing in RERA-approved townships like Royal Greens, ensures consumer protection, quality assurance, timely delivery, financial security, and dispute resolution. 
• Single Window Clearance System– Homebuyers are eagerly waiting for the Interim budget 2024-25 for the proposed single window clearance system being a major point of interest. This system will streamline the approval process and would expedite project development, boosting homebuyer confidence. The single window would also ensure there are reduced uncertainties around clearances and legal issues would be a welcome change. Beyond speed, homebuyers anticipate a decrease in compliance and approval expenses for developers. This cost reduction will help in real estate innovation and growth. A Single Window Clearance System is seen as a potential game-changer. Homebuyers believe it will simplify processes, improve efficiency, and make the real estate sector more responsive to market needs. 
• Concessions in Stamp Duty– Reducing stamp duty or allowing buyers to deduct double the amount paid on their income taxes could encourage more property registrations, leading to a smoother flow of real estate transactions. It will encourage property owners to register agreements formally. This would increase transparency in the real estate market and streamline property transactions. 
• Separate Home Loan Principal Repayment System– Safe and secure housing is essential for everyone. To make a buying decision achievable, the homebuyers expect the government to consider tax breaks that directly benefit the homebuyers. Experts believe that the current tax code needs an update to better support homeownership.