Affordable housing has collapsed, says Hiranandani – his fix: let companies, banks and Tata trusts build rental homes

Speaking at News18’s Rising Bharat Summit 2026, veteran developer Niranjan Hiranandani delivered a blunt verdict on affordable housing: it has effectively been destroyed. He argued the segment has become economically unviable because land prices, construction costs and government charges together push prices out of reach – noting that on a home selling at Rs 40,000 per sq ft in Mumbai, roughly Rs 20,000 goes to the government first through stamp duty, labour cess and development charges, which governments are unlikely to cut because they fund metro and road infrastructure. The scale of the shift is stark: per the Economic Survey 2025-26, homes priced below Rs 50 lakh fell to 17 per cent of new supply across India’s eight largest cities in 2025, down from 52.4 per cent in 2018. Rather than blame builders alone, Hiranandani called for a different model centred on rental housing. His argument: residential rentals yield only 2-3 per cent, which keeps developers and institutions out, so the government should make the segment investable through tax rebates and build it quickly with 10-year incentives. He suggested extending the existing industrial-housing tax write-off (where a company housing its workers can deduct qualifying spend over 10 years) to service-sector employers including banks and financial institutions – citing Reliance and HDFC as the kind of firms that could house staff and ease long commutes – and allowing charitable trusts, including Tata entities, and CSR funds to build rental homes, much as pre-independence trusts once built Mumbai’s chawls. He pointed to the United States, where about half the population lives in rental housing.

Strip away the specific proposals and the real signal is the collapse itself: the part of the market that houses ordinary, first-time and middle-income buyers has shrunk from more than half of new supply to under a fifth in seven years – and that is a national problem, not a Mumbai one.

For our readers, this is national policy commentary rather than a local story, so we carry it in the general Real Estate section – but it matters for how you read your own market. Two honest notes of balance: first, this is a leading developer’s view, and his fixes (tax breaks for institutional landlords) would also benefit developers, so weigh it as an informed argument, not neutral policy. Second, the underlying data is real and relevant even in Noida and Pune – the thinning of genuinely affordable supply is exactly why mid-segment buyers increasingly find fewer options under Rs 50 lakh and why rental demand is rising. If you are a buyer priced out of purchase today, the practical takeaway is that organised rental housing may become a more serious, better-quality option over the next few years; if you are an investor, the 2-3 per cent gross residential yield he cites is a useful reality check against over-optimistic rental-return assumptions. As always, base any decision on your own city’s prices, RERA-registered projects and clear title rather than on the policy debate itself.

Sources: Business Today (Nov 2, 2026), Business Today – ‘Affordable housing is destroyed’ (Nov 1, 2026)