Union budget: Sitharaman announces ₹15,000 cr for stressed housing projects

Union budget: Sitharaman announces ₹15,000 cr for stressed housing projects

Union budget: Sitharaman announces ₹15,000 cr for stressed housing projects BySoumya Chatterjee Feb 01, 2025 06:00 PM IST Share Via Copy Link In her budget speech, Union finance minister Nirmala Sitharaman 40,000 units in stressed housing projects will be completed in 2025, further helping middle-class families

Union finance minister Nirmala Sitharaman on Saturday announced ₹15,000 crore for Affordable and Mid-income Housing (SWAMIH) Fund 2.0 to address the issue of stressed housing projects. The fund was first introduced in the 2019 budget for priority debt financing for completing stressed, brownfield, and Real Estate Regulatory Authority (RERA)-registered residential projects in the affordable and mid-income category.

As many as 50,000 dwelling units in stressed housing projects have been completed. (HT PHOTO/Representative)

In her budget speech, Sitharaman said 50,000 dwelling units in stressed housing projects have been completed and handed over to homebuyers. “Another 40,000 units will be completed in 2025, further helping middle-class families paying EMIs on loans taken for apartments while also paying rent for their current dwellings.”

She said the second edition of SWAMIH fund will be a blended finance facility with contributions from the government, banks, and private investors for expeditious completion of another 100,000 units.

The government has been pushing affordable housing (including for economically weaker sections) under the Pradhan Mantri Awas Yojana–Urban. It eliminated the Credit Linked Subsidy Scheme (CLSS) component under the scheme after 2022. In the last budget, a similar interest subvention scheme was re-introduced for the middle-income segment.

National Real Estate Development Council national president G Hari Babu said the SWAMIH Fund 2.0 will directly benefit middle-class families, many of whom are juggling EMIs for home loans while paying rent for alternative accommodation. “The decision to exempt income up to ₹12 lakh from taxation under the new regime is a significant incentive for the middle-income group, making homeownership more accessible and encouraging investment in the housing sector.” He said the budget could have also addressed the affordable housing segment.

A Confederation of Indian Industry and Knight Frank report released in December projected the affordable housing shortage to touch 312,000 units by 2030.

Babu said rising home loan interest rates and the outdated definition of affordable housing have created barriers for many potential homeowners. “The government should prioritise revisions to the current housing cap, which has been stagnant for nearly eight years, making it difficult for developers to deliver affordable homes within the set limits. Reforms to the capital gains tax framework and the introduction of tax relief for rental housing would also ensure a more sustainable and equitable real estate market.”

Anarock Group chairman Anuj Puri said the budget delivers both direct and indirect benefits, acting as a catalyst for growth. He said the absence of major announcements for the affordable housing sector will leave stakeholders disappointed. Puri said the tax benefits announced for residential property investors were among the positives. “Investors can now claim nil valuation for two self-occupied properties, instead of just one; a positive move for residential real estate investment. The simplified TDS on rent decreases the compliance burden and enhances liquidity for landlords and will positively impact the rental housing market, especially in metros.”

He said previously homeowners could claim only one self-occupied property as tax-free. Puri said now they can claim two, thereby removing taxation on notional rental income from a second home. “This step minimises tax pressures, promotes homeownership, and facilitates real estate investment, especially in second homes and Tier 2 and 3 cities.”

Debarpita Roy, visiting fellow at Centre for Social and Economic Progress (CSEP) said the budgetary provision for urban housing in 2025-2026 was ₹25,794 crore. “But three-fourths of it is for completion of about 3 million houses which are yet to be completed under PMAY-U phase 1. The rest is for PMAY-U phase 2, and the recent scheme for industrial housing,” she said.

She said while the provision under industrial housing would primarily cater to the captive demand from industries, it should be explored whether some of the units from these projects, especially, those located near million plus cities, can be earmarked to cater to the city’s general rental demand.

“Since PMAY-U 1 did not serve million-plus cities, it is important to monitor PMAY-U phase 2’s progress and funds usage in serving the EWS households of million plus cities,” she added.

Union Budget 2025 LIVE | Big Relief For Middle Class | New Tax Slabs | Nirmala Sitharaman Speech