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Big push for the affordable housing: Center increases carpet area of Middle Income Group houses


by Souma Mukherjee

Big announcement from the union cabinet for the Middle Income Group (MIG) of India! Yes, the cabinet has finally approved an increase in carpet area of houses eligible for interest subsidy under the Credit-Linked Subsidy Scheme (CLSS). The carpet area limit of Affordable Housing for Middle Income Group (MIG), under interest subvention scheme in Pradhan Mantri Aawas Yojna (PMAY), has been increased from 90 sq mtr to 120 sq mtr and from 110 sq mtr to 150 sq mtr respectively. These changes will be effective from Jan 1, 2017, the date when it was initially implemented.

The middle-income group will comprise of two slabs. MIG-1 will comprise of households having an annual income between Rs.6,00,000 up to Rs.12,00,000. Whereas MIG 2 will comprise of households having an annual income between Rs.12, 00,001 up to Rs.18, 00,000. In the MIG-1, an interest subsidy of 4% has been provided for loan amounts up to Rs.9 lakh while in MIG-2, an interest subsidy of 3% has been provided for the loan amount of Rs.12 lakh. The interest subsidy will be calculated at 9% NPV over a maximum loan tenure of 20 years or the actual tenure, whichever is lesser.  Housing loans above Rs 9 lakh and Rs12 lakh will be at non-subsidized rates.

It is a big boost to the affordable housing sector and will surely give individuals in the middle-income group a wider variety and choice of the developers to choose from.  The limit of 120 sq m. and 150 sq m. is seen as a reasonable enhancement and would cater to the market generally scouted by the MIG belonging to the two income categories specified in the scheme.

The industry hailed the decision:

Mr. R. K Arora Chairman, Supertech Limited expressed: “The real sector which is at inflection point the decision to increase size of MIG-I and MIG-II category flats under PMAY Scheme will certainly bring cheers and positive sentiments to buyers, developers and housing finance community. For developers, the move will certainly help to clear the unsold inventory whereas the buyers can get more spacious homes and avail the subsidy benefits of Rs. 2.50 lacs at accessible rates. By announcing such schemes, we believe it will help bringing the entire demand for affordable housing under the interest subvention scheme. Further, we believe this will boost demand and help our company to achieve its sales target”.

Shri Rajeev Talwar, Chairman and Shri Niranjan Hiranandani, President, NAREDCO congratulated Hon’ble Prime Minister and the Central Govt. for above landmark decisions, which will help in meeting the aspiration of millions of MIG home buyers. They felt that this decision of Govt., beside helping in clearing unsold stock, will also encourage developers to launch new projects and boost economy, GDP growth and employment. This decision will now bring the entire demand for affordable housing under the interest Subvention Scheme, accounting for almost 96% of the total demand for housing in the country.

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