Accommodation Times News Service
Prime Minister Narendra Modi, in his televised address to the nation on New Year’s Eve, hailed the citizenry ‘sacrifice’ in fight against corruption and introduced certain incentives that might provide mild repose to the economically weaker in the long run.
In a bid to pave an easier access for the financially deprived towards buying of their own homes, PM Modi launched two new housing schemes for the urban as well as rural poor.
Under the Prime Minister Awas Yojana (PMAY), for loans up to 12 lakh and 9 lakh, an interest subvention of 3% and 4% respectively has now been granted. Apart from this, in rural areas, an interest exemption of 3% will be provided on home loans of up to 2 lakhs availed for creation of new houses as well as the renovation of the existing ones. The government has also decided to increase number of homes to be built in villages by 33%, said PM Modi in his speech.
“This move will bring back some of the fence-sitters on the affordable housing segment, and help boost some peripheral markets where such housing is being built. Overall, it is a good step forward which is line with the government’s avowed mission to make ‘Housing for All by 2022’ a reality,” said Kishor Pate, CMD – Amit Enterprises Housing Ltd.
The updated schemes in likely to give an extra boost to the affordable housing section, working conjointly with the existing benefits made available for the Economically Weaker Section of the Society (EWS) by the Modi government in 2015.
“There is a need of affordable housing across metro cities where we see large influx of people coming, in search of jobs and a better livelihood. The government’s decision on exemption of home loan interest rates for poor and middle class people is therefore a welcome move. At the same time, the key challenge for the center now is to offer land at subsidized rates for development as cost of land is the largest component to final cost of an apartment. The government also needs to control the raw material prices as this has a direct bearing on final cost to customer,” said Chintan Sheth, Director – Sheth Corp.
Citing the restrictive nature of the announced scheme, Rajesh Krishnan, MD & CEO – Brick Eagle Group said, “Under the PMAY, loans up to Rs. 6 Lakhs have already been receiving a 6.5% subsidy for the LIG segment. This has now been extended to MIG. However, the need of the hour is to boost the supply side. The Affordable Housing sector remains capital starved. One of the measures could be to qualify Bank loan for Affordable Housing projects under PSL. If home loans for units priced under Rs. 35 lakhs can fall under the ambit of PSL, so can housing projects providing those units. Currently, only projects with houses priced less than Rs. 10 lakhs, sold only to EWS (defined as family Incomes of less than Rs. 2 lakhs p.a.) qualify for PSL. Since this clause is so onerous, there are hardly any projects across India that has received funding under PSL.”
As of now, under the center’s ‘Housing for All 2022’ scheme which aims to build over 2 crore new houses in next seven years to meet housing shortage- prominently witnessed by EWG and LIG, an interest subvention of 6.5% has been offered on housing loans availed by the beneficiaries for a period of 15 years.