New Delhi, Jan 14: Realtors' body Naredco on Thursday urged the government to hike deduction on home loan interest to Rs 5 lakh from Rs 2 lakh limit at present and re-introduce subvention scheme in the upcoming Budget to boost sales of residential properties and create housing revolution.

The association also sought incentives for rental housing and more stress funds to help complete distressed and stalled projects.

"Last three years have been extremely difficult for the real estate industry. The reforms like demonetisation and realty law RERA as well as the liquidity challenges in the NBFCs post-IL&FS crisis hit demand. The industry went through tough times," Naredco National President Niranjan Hiranandani told reporters through a video conference.

He said the central government and some states like Maharashtra have taken various decisions to boost housing demand, but more needs to be done.

"We want a housing revolution like the IT revolution and green revolution," Hiranandani said.

Listing out the association's key pre-Budget demand, the Naredco President said there is a need to rationalise personal taxes as it has been done for corporates.

Hiranandani said the deduction on home loan interest should be enhanced to Rs 5 lakh from Rs 2 lakh under section 24 of IT Act 1961 in order to incentivise home buyers.

He also recommended long-term capital gains at 10 per cent (on par with the provision of section 112 for equity shares and reduction in the period of holding house property to up to 12 months from existing 24/36 months to qualify as a long-term capital asset.

Naredco Chairman Rajeev Talwar said the government should lift the ban on subvention schemes, wherein real estate developers pay home loan interest on behalf of homebuyers for a certain period. In 2019, the National Housing Bank's (NHB) banned lending by housing finance companies under the subvention scheme.

The association also pitched for extension of the Credit Linked Subsidy Scheme (CLSS), under which subsidy up to Rs 2.7 lakh is being provided to home buyers.

To promote rental housing, the deduction of 30 per cent from the annual rental income (for the purpose of maintenance) should be increased to 50 per cent.

Hiranandani complimented the government for establishing the SWAMIH fund worth Rs 25,000 crore to help the real estate sector.

However, he said, the Centre should allow more such stress funds to help facilitate the last mile funding for stressed and stalled projects.

"Industry demands estimated Rs 1,25,000 crore via many HFCs/NBFCs who are ready to establish such funds for ailing real estate sector. This will allow for faster appraisals and sanctions," the association said.

Naredco said the one-time restructuring of loans will play an important role in improving the liquidity situation.

"The requirement of the unit being 'standard unit' if done away and restructuring permitted for all units as per mutual agreement with the financing enterprise and the borrower would have a positive impact," it added.

Hiranandani said there is a need to boost investment from both the public and private sectors for achieving higher economic growth.