High Taxes, Regulations Hindering Affordable Housing In Mumbai: Niranjan Hiranandani

Niranjan Hiranandani, one of India's leading real estate magnates and founder of the Hiranandani Group, has raised concerns about the hurdles making affordable housing in Mumbai a distant dream. Speaking on the issue, Hiranandani pointed to excessive government taxation, inflated ready reckoner rates, and bureaucratic inefficiencies as the main factors driving up housing prices, leaving developers unable to deliver affordable homes.

“Today, if you buy a home in Mumbai, up to 50 per cent of your money goes to the government in the form of various taxes, charges, and stamp duty,” Hiranandani stated. He also criticised the government’s practice of inflating ready reckoner rates, which set the minimum price for property transactions, making it nearly impossible for developers to offer homes at lower prices. “If I sell a home below the inflated rates, I get penalised by the Income Tax Department,” he added.

Hiranandani also highlighted the government’s focus on slum rehabilitation as a populist measure that favours slum dwellers but leaves middle-class buyers burdened with higher costs. Additionally, he emphasised that the ease of doing business in the real estate sector is severely hampered by a lack of coordination between various government ministries and departments, leading to project delays and inflated costs.

"Affordable housing is simply not possible under these circumstances," Hiranandani concluded, calling for urgent reforms in taxation, regulations, and infrastructure planning to make housing accessible for all.

Despite the government’s ambitious housing goals, the affordable housing segment in India has been facing challenges. Reports indicate that affordable home sales accounted for less than 20 per cent of total home sales in the first quarter of 2024, almost half the share compared to 2019. In contrast, higher-priced homes made up more than 20 per cent of sales across India’s top seven cities, a significant jump from the high single digits in 2019.

Developers are increasingly shifting focus towards higher-priced housing segments where demand is stronger, which presents a challenge for the government’s affordable housing objectives. However, with the new PMAY expansion, the government aims to reverse this trend and bring affordable housing back into focus for millions of Indian families.