Mid-income Group under PMAY umbrella
The recent initiatives of Centre Government of increasing the carpet area for Mid-income Group segment and increase in the housing loan limits will give due fillip to the real estate sector.
Housing for all is not just a coined term for the centre but the government is taking several initiatives for turning it into a reality, in a bid to increase the demand for affordable housing. The state schemes along with Centre’s PMAY (Pradhan Mantri Awas Yojna) are creating incentives, which are letting the developers to launch more projects in the affordable housing sector. The move along with the government decision agreed to use the surplus land of sick Public Sector Undertakings (PSUS) for the construction of affordable units will expand the field of affordable housing across the country. The only result to this move, is the increased availability of housing sector in the primary as well as resale markets. Homebuyers and the realty markets are real beneficiaries as a large number of homebuyers will now be able to avail benefits under PMAYU triggering sales.
Carpet area increase
The Ministry of Housing and Urban Affairs announced an almost 33 per cent relaxation for carpet area. The eligibility limit for carpet area had been augmented from 120 sq.m to 160 sq.m for MIG-I category, and from 150 sq.m to 200 sq.m for MIG-II category. The CLSS allows beneficiaries to claim interest subsidy up to Rs 2.35 lakh on purchasing a house in these categories.
extended interest subsidy
Another effective move taken by the RBI, was the announcement of the revision of housing loan limits for eligibility for priority sector lending (PSL) from the existing Rs 28 lakh to Rs 35 lakh for metros and for other cities from the current Rs 20 lakh to Rs 25 lakh. The overall cost of the dwelling unit in the metropolitan centre (with a
population of 10 lakh and above) and at other centres should not exceed Rs 45 lakh and Rs 30 lakh, respectively.
• EWS – Loans sanctioned on or after 17/06/2015
• LIG – Loans sanctioned on or after 01/01/2017
• MIG I – Loans sanctioned on or after 01/01/2017
• MIG II – Loans sanctioned on or after 01/01/2017
• You can only apply for loan if you don’t own a pucca house anywhere already
• Combined income of those applying should not be more than Rs.18 Lakhs a year
• A household (family) with combined income less than 18 Lakhs a year
• A single working individual (man/ woman/transgender) with income less than Rs.18 Lakhs a year
• Married couple with combined income less than Rs.18 Lakhs a year
• Married couple with combined income less than Rs.18 Lakhs and living with parents, where parents own the house.
how to apply
For CLSS (MIG) it is not mandatory to have a female co - applicant or owner. If your household income is above Rs.50,000 per month, you have to apply for this scheme only through your bank. If you want to find out more, extensive details of the scheme are available on Pradhan Mantri Awas Yojana online website.
interest subsidy flow
Many leading banks and housing finance companies have empanelled with NHB and HUDCO to offer benefits under PMAY. For example, State Bank of India (SBI) and its Subsidiaries, ICICI bank, Axis Bank, Yes Bank, IDBI Bank and Punjab National Bank to name a few. Also, one is not allowed to switch the home loan at any time during the loan period.
Period of subsidy
• EWS – 20 Years or loan tenure
• LIG – 20 Years or loan tenure
• MIG I – 20 Years or loan tenure
• MIG II – 20 Years or loan tenure
Maximum subsidy amount
• EWS – Rs. 2.67 Lakhs
• LIG – Rs. 2.2 Lakhs
• MIG I – Rs. 2.35 Lakhs
• MIG II – Rs. 2.3 Lakhs
the Positive impact
Housing cost varies from cities to cities and the cost of average residential unit in Metros and Tier-i cities is quite high whereas, in small cities, an eligible home buyer can get a bigger carpet area for his house. Home Buyers in Tier II and Tier III cities shall be the major beneficiaries.” No doubt, the revisions in PMAY favourable for middle income segment will not only enable more homebuyers to avail the subsidies and other incentives in the scheme, but will also help bolster construction activity in the affordable housing sector in the country. Sharing a perspective on how this move will further increase the demand for affordable projects in tier II and III cities. The Reserve Bank of India (RBI) has increased the loan limits for banks and housing finance companies (HFC) so that these financial institutions can meet their priority sector lending (PSL) requirements. The enhancement in housing loan limits would lead to first-time home buyers fall into the realm of affordability. It would also lead to many more developers looking at catering to this segment. This altogether will increase formalization of the overall economy. This move has not just given relief to MIG segment homebuyers but due to this reform, real estate developers have also kick started with their housing activities, which has given rippling impact and much needed impetus to the entire real estate market having forward and backward linkages; thereby providing a push to the economic activities in the country.