In a move that will benefit lakhs of middle class homebuyers in availing better interest subsidy and upgrading the quality and size of their housing units, the government has decided to tweak the interest subsidy rule under its flagship Pradhan Mantri Awas Yojana -Urban programme.
The decision to tweak the credit linked subsidy scheme (CLSS) scheme under PMAY -Urban was approved by the Union Cabinet on Thursday.
It is expected to boost the sale of the thousands of flats that are lying unsold in the affordable housing segment. Thus, homebuyers will be allowed a wider choice in the vast inventory of developers' projects.
The CLSS for middle income group (MIG) covers two income segments in the MIG ie Rs 6,00,001 to Rs 12,00,000 (MIG-I) and Rs 12,00,001 to Rs 18,00,000 (MIG-II) per annum.
Under the new rules, the carpet area in MIG-I category buyers will go up to 120 square metre from the existing 90 square metre, while for MIG-II, it will go up to 150 square metre from the existing 110 square metre.
The carpet area of a housing unit is its actual usable area, enclosed within its walls.
"In MIG-1, an interest subsidy of 4 per cent has been provided for loan amounts up to Rs 9 lakh while in MIG-2, an interest subsidy of 3 per cent has been provided for loan amounts up to Rs 12 lakh," an official release stated.
It added that the interest subsidy will be calculated at 9 per cent NPV (net present value) over a maximum loan tenure of 20 years or the actual tenure, whichever is lesser.
However, housing loans above 9 lakh and 12 lakh will be available at non-subsidised rates.
This will be effective from January 1, 2017, from when CLSS for MIG had started.
"This move will allowing homebuyers to avail the interest subsidy scheme under Credit Linked Subsidy Scheme for larger houses," a senior official said.
On Wednesday, union minister of state for housing and urban affairs Hardeep Singh Puri had stated that housing shortage estimate in urban areas has been revised to around 10 million units as against the 2011 projection of 18.76 million.
"The move will help meet this shortage by incentivizing the actual buyer. It gives a greater benefit to the MIG by addressing the affordability and the easy credit," the official said.
Puri said the cabinet decision is in the direction of housing for all by 2022.
The total demand for urban housing is estimated at 4.2 million units during the period 2016-2020 across the top eight cities, a report released last year by Cushman & Wakefield and GRI had stated.
NEW RULE
- Under the new rules, the carpet area in MIG-I category buyers will go up to 120 square metre from 90 square metre.
- For MIG-II, it will go up to 150 square metre from 110 square metre.
