The Ministry of Housing and Urban Affairs has revised its prescribed carpet areas of residential units for eligibility to avail interest subsidy under the Credit Linked Subsidy Scheme (CLSS) for the middle income group (MIG).
The prescribed carpet area limits for availing interest subsidy under the Pradhan Mantri Awas Yojana (Urban) have been revised to 160 sq m from 120 sq m for MIG I, and to 200 sq m from 150 sq m for MIG II.
For the MIG I category, which consists of individuals with an annual income of Rs 6-12 lakh, an interest subsidy of 4 percent is provided on a loan of up to Rs 9 lakh.
For the MIG II category, which is made up of individuals with an annual income of Rs 12-18 lakh, an interest subsidy of 3 percent is given on a loan of up to Rs 12 lakh.
The benefits are typically in the Rs 2-2.5 lakh range.
These changes will allow more middle-income customers to become eligible to avail subsidy for bigger houses, and get the benefits provided under the Pradhan Mantri Awas Yojana (Urban).
They are seen boosting demand for new houses in the middle-income category and will help the government meet its target of ‘Housing for All by 2022′.
The revisions also give middle-income buyers a wider range of developers’ projects to choose from. Experts reckon the increase in prescribed carpet area will result in increased sale of already-built flats in the affordable housing segment.
Apart from increasing the number of beneficiaries, the increase in prescribed carpet area will also result in an improvement in construction activity, and will help move the housing sector forward, the ministry said.
The decision comes shortly after the RBI decided to revise the limits for a loan to qualify as a priority sector loan.
Prime Minister Narendra Modi had first announced the PMAY (Urban) for the middle income group in his New Year’s Eve address on December 31, 2016.
The scheme approved initially, for implementation for the year 2017 has been extended up to March 31, 2019. The CLSS for MIG scheme has gained momentum in the last couple of quarters and the off take has picked up significantly.
As on June 11, 2018, a total of Rs 736.79 crore had been disbursed to 35,204 middle-income beneficiaries under the CLSS.
The decision to increase the prescribed carpet area was taken after receiving multiple inputs from various stakeholders.
One of key issues was the denial of CLSS benefit to potential beneficiaries, because they were buying flats or houses, or constructing houses, with carpet areas of over 120 sq m or 150 sq m.
This rendered them ineligible for availing interest subsidy under the CLSS for the middle income group, the ministry said.
During workshops and review meetings conducted by the central nodal agencies (CNAs) – Housing and Urban Development Corporation (HUDCO) and National Housing Bank (NHB) – with the PLIs, there had been requests for increasing the carpet areas specified for the MIG I and MIG II categories.
The subsidy of up to Rs 2.30 lakh on home loans under the MIG II category, and of up to Rs 2.35 lakh for MIG I, is available until March 2019.
Experts had said all along that for the scheme to realise its potential, the limit set for the size of the apartments needs to be increased. This issue has now been addressed.
Real estate developers have welcomed the move.
“Credit Linked Subsidy Scheme has liberalized carpet area norm from 120 sq m to 160 sq m for MIG I and from 150 sq m to to 200 sq m for MIG II. This is gift from the government for each aspiring MIG home buyer and a big push to housing for all,” said CREDAI President Jaxay Shah, president CREDAI National.
Praveen Jain, who is President at NAREDCO Haryana, said it will provide a fillip to housing in metro cities