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Union Budget 2025 Real Estate: Key Announcements & Impact

Finance Minister Nirmala Sitharaman presented the budget on February 1, emphasizing economic growth, infrastructure development, and tax reforms. The budget introduced several measures impacting the real estate sector, particularly in urban infrastructure and housing, while indirect benefits such as tax relief and investment incentives were also highlighted.

Key Announcements in Union Budget 2025 Real Estate

1. SWAMIH Fund 2 for Stalled Housing Projects

The Special Window for Affordable and Mid-Income Housing (SWAMIH) has successfully delivered 50,000 units, with another 40,000 units set for completion in 2025.
SWAMIH Fund 2 will be launched with a Rs 15,000 crore blended finance facility to expedite the completion of an additional 1 lakh housing units, reinforcing the government’s commitment to housing development under Union Budget 2025 Real Estate.

2. Tax Relief for Residential Property Investors

Taxpayers can now claim the annual value of two self-occupied properties as nil, removing previous restrictions, which is a positive move for property investors.
Previously, homeowners were allowed to claim this benefit only on a single self-occupied property, and any additional property was deemed to have notional rental income, which was taxable.
The revised provision eliminates this tax burden, making it easier for individuals to own multiple homes without additional tax liability.
This change is particularly beneficial for investors and individuals who own homes in different cities due to employment or business needs.
The policy also encourages real estate investment by making second-home ownership more attractive, thus boosting demand in the mid-to-premium housing segments in Union Budget 2025 Real Estate.

3. Increased TDS Limit on Rent

The annual TDS limit on rental payments has been increased from Rs 2.40 lakh to Rs 6 lakh, reducing compliance burdens for small landlords, enhancing investment attractiveness in the Real Estate sector.

4. Public-Private Partnerships (PPP) in Infrastructure

Infrastructure ministries will introduce a three-year pipeline of PPP projects to stimulate growth in urban regions, aligning with long-term real estate development strategies.
States will receive support from the India Infrastructure Project Development Fund (IIPDF) to develop PPP proposals, benefiting urban land planning.

5. Urban Reforms & Urban Challenge Fund in Union Budget 2025 Real Estate

Governance, municipal services, urban land reforms, and planning incentives will be introduced to enhance urban infrastructure.
A Rs 1 lakh crore Urban Challenge Fund will finance city redevelopment projects, with Rs 10,000 crore allocated for FY 2025-26 under the initiatives.

6. Alternate Investment Funds (AIFs)

Tax certainty will be provided to Category I and II AIFs investing in infrastructure and other sectors, encouraging capital flow into the Real Estate market.

7. National Framework for Global Capability Centres (GCCs)

The framework will provide guidance for states to promote GCCs in Tier 2 cities, focusing on talent availability and infrastructure development.

8. Extension for Startup Incorporation

Startups incorporated before April 1, 2030, will continue to receive tax benefits, further stimulating commercial real estate demand.

9. Support to States for Infrastructure

Rs 1.5 lakh crore in interest-free loans will be provided to states for capital expenditure and infrastructure reforms, directly impacting Union Budget 2025 Real Estate.

10. Investment Friendliness Index of States

A new index will be launched in 2025 to promote competition among states in attracting investment in the real estate sector under Union Budget 2025 Real Estate.

Real Estate Industry Reactions

Industry Leader	Response & Analysis
Murali Malayappan (Shriram Properties)	The increase in the zero-tax slab to Rs 12 lakh will boost disposable income, driving housing demand. The launch of SWAMIH Fund 2 will help clear stalled projects and improve housing supply under Union Budget 2025 Real Estate.
Tribhuwan Adhikari (LIC Housing Finance)	Exemption of income tax for earnings up to Rs 12 lakh will encourage homeownership, while SWAMIH expansion supports affordable housing. However, further relief on home loan interest and affordable housing definition revisions were expected.
Shesh Rao Paplikar (BHIVE Workspace)	The GCC framework will boost demand for flexible office spaces in Tier 2 cities, enhancing commercial real estate prospects.
G Hari Babu (NAREDCO)	Affordable housing measures were limited, and home loan interest rates need more intervention to boost accessibility.
Jagadish Nangineni (Sobha)	Urban infrastructure focus is well-placed, as cities are expanding rapidly. Income tax relief will drive consumption, benefiting Union Budget 2025 Real Estate.
Amit Kumar Sinha (Mahindra Lifespace Developers)	The Urban Challenge Fund and urban governance reforms will drive sustainable urbanization, crucial for the long-term growth of real estate.
Niranjan Hiranandani (NAREDCO & Hiranandani Group)	Middle-class tax incentives will enhance housing demand. Retail home loan portfolios have grown by 40% post-COVID, and lower interest rates could further fuel this trend.
Amar Mysore (CREDAI Bengaluru)	Indirect benefits like tax savings help, but key demands, such as affordable housing redefinition, remain unaddressed.

Missed Opportunities & Industry Expectations in Union Budget 2025 Real Estate

Despite several positives, industry leaders believe some key issues remain unresolved:

Affordable Housing Definition: No revision to the Rs 45 lakh cap, which does not align with market realities.
Home Loan Interest Exemptions: Additional tax benefits on home loan interest were expected but not introduced.
Capital Gains Tax Reforms: Adjustments to long-term capital gains tax could have improved investor confidence.
Rental Housing Benefits: No specific incentives for rental housing to encourage more supply in the market.

Conclusion

This budget takes a long-term, infrastructure-led approach to real estate development. The expansion of SWAMIH, increased TDS limits, tax benefits for second self-occupied properties, and a focus on urban reforms are positive steps under Union Budget 2025 Real Estate. However, industry stakeholders highlight the need for deeper interventions in affordable housing, rental incentives, and home loan interest relief to further stimulate the sector.

With mixed reactions from real estate experts, the budget provides a solid foundation for urban growth but leaves room for future improvements. The success of these initiatives will depend on their implementation and industry participation in the coming years.

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