The Union Budget 2025-26 has sparked significant discussions surrounding the real estate sector, with some key developments that are expected to bring positive changes to the industry. From changes in House Rent Allowance (HRA) provisions to a major boost in the Pradhan Mantri Awas Yojana (PMAY), there are several updates that could reshape the real estate landscape in India. Let’s dive into the key highlights of the Economic Survey 2024-25 related to real estate.
1. HRA Provisions Under the New Tax Regime
A key point of interest in the 2025-26 Union Budget discussions is the potential inclusion of House Rent Allowance (HRA) under the new tax regime. Currently, under the old tax regime, salaried employees can claim HRA exemptions if they live in rented accommodation. The exemption is calculated as the least of the following:
- The actual HRA received
- 50% of the basic salary for those in metro areas (40% for non-metro areas)
- The actual rent paid minus 10% of the salary.
With rising living costs and rental prices in urban areas, experts like Karan Virwani from Embassy Group anticipate adjustments to HRA provisions to offer better financial flexibility to employees. This move could make housing more affordable, especially in high-rent urban areas.
Also Read: Will Budget 2025 Transform Real Estate? Key Expectations Revealed
2. SVAMITVA Scheme - A Boost to Land Ownership
A major initiative that is gaining momentum is the SVAMITVA scheme, which aims to establish clear ownership of land in rural areas. As of now, over 2 crore 25 lakh SVAMITVA cards have been issued, with 70 lakh of these issued in just the last six months. The government’s goal is to provide legal ownership of land to rural poor families. This step is expected to help people secure their land rights and encourage long-term investment in rural real estate. The continued rollout of these cards is set to provide clarity and security to property ownership in rural India.
3. PM Awas Yojana Gets a Major Financial Boost
The PM Awas Yojana (PMAY) continues to be one of the flagship schemes aimed at providing affordable housing to all. President Murmu announced an additional allocation of Rs 5,36,000 crore to PMAY, specifically for building homes for an additional 3 crore families. PMAY has already helped millions, and this further expansion promises to enhance the welfare of both urban and rural poor. The government is focusing on ensuring that every eligible individual has access to a permanent house.
Under the scheme, low-income families, including those in the economically weaker sections (EWS), are eligible for interest subsidies on loans taken to buy or construct homes. This has been a crucial factor in driving affordable housing and will likely continue to shape the real estate market, especially in rural and semi-urban areas.
4. Expansion of PMAY in Union Budget 2025-26
The expansion of the Pradhan Mantri Awas Yojana (PMAY) is one of the key highlights of the 2025-26 Union Budget. The government’s decision to extend the scheme to provide homes to 3 crore more families is expected to further boost real estate development, particularly in low-cost housing. PMAY’s credit-linked subsidy scheme (CLSS) remains a vital component in the government's strategy to assist low-income households in owning homes. The new budget is expected to streamline these benefits and make the housing process even more accessible to those who need it most.
5. Impact on Real Estate Developers and Builders
The government's support through schemes like PMAY and SVAMITVA is expected to drive real estate development, particularly in affordable housing. Builders and developers focusing on affordable housing are likely to see a surge in demand, as the government is providing financial incentives to make housing more accessible.
Moreover, the increase in land ownership clarity through initiatives like SVAMITVA will encourage developers to invest in rural and peri-urban areas, thereby expanding the scope of real estate development beyond just metros and big cities.
Conclusion
The Economic Survey 2024-25 reflects the government’s commitment to enhancing the real estate sector in India, with a particular focus on affordability and accessibility. From a potential adjustment in HRA provisions to a massive push for affordable housing under PMAY and the SVAMITVA scheme, the upcoming budget is poised to make a significant impact on the industry. These initiatives not only aim to ease the financial burden on the middle class but also focus on ensuring that property ownership is more inclusive, extending to rural areas as well. As we look forward to the Union Budget 2025-26, these developments will shape the future of real estate in India, driving both demand and investment.
Also Read: Budget 2025: Expectations and Impacts on Key Sectors
Ans 1. The potential inclusion of House Rent Allowance (HRA) under the new tax regime is expected to provide better financial flexibility for salaried employees, especially in high-rent urban areas, making housing more affordable.
Ans 2. PMAY has received a major financial boost with an additional Rs 5,36,000 crore allocation, aiming to build homes for 3 crore more families. This expansion will enhance affordable housing for low-income and rural families.
Ans 3. The initiatives outlined in the Economic Survey, such as PMAY and the SVAMITVA scheme, aim to make property ownership more inclusive, focusing on both urban and rural areas. These reforms will help middle-class families and those in economically weaker sections to access affordable housing.
Ans 4. These initiatives are designed to promote financial inclusion, reduce housing inequality, and drive economic growth by supporting affordable housing, boosting real estate investments, and ensuring more people have access to secure land and property ownership.
Ans 5. The expansion of PMAY will drive real estate development, particularly in affordable housing. The inclusion of 3 crore more families under the scheme is expected to boost demand for homes and stimulate the housing sector.