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The Government’s decision to increase the carpet area of houses eligible for interest subsidy under the Credit Linked Subsidy Scheme (CLSS) for the Middle Income Group (MIG) under Pradhan Mantri Awas Yojana (PMAY) will enable buyers to get better quality home. The move also means that the private developers will have incentives to increase scale.
Under PMAY, the area of the house is different for all categories and it's the carpet area and not the super area that is to be looked at.
“The Cabinet’s decision is a massive positive for the macros of housing. The home buyer now has a larger pool of prospective houses to choose from. The fence sitters specially, who were delaying their home purchase, will now be given a further push. Builders, meanwhile, will not only enjoy the general uptick in the market that is ahead of us, but can also accelerate the sale of housing units,” Gagan Banga, VC & MD, Indiabulls Housing Finance Ltd, said.
Rajesh Krishnan, Founder & CEO, Brick Eagle- a platform for affordable housing, said, “The government decision to enhance the classification of affordable housing by extending the carpet area to a maximum of up to 150 metres (over 1,600 sq feet) translates into ticket size of ₹40-100 lakh. This is set to act as a catalyst for the fragile real estate sector by reviving demand.”
He said the increase in threshold limit will enable the middle income group buyers to avail interest rate subvention under CLSS, but would dilute the impact for the lower strata of the society with lower ticket size.
Jaxay Shah, President, CREDAI National, said, “on the supply side, private developers have improved incentives to increase scale and contribute to bringing about of New India.”.
Rajeev Talwar, Chairman NAREDCO, the apex body of real estate industry, said:“This will enable MIG home buyers to avail 4 per cent interest subsidy on home loans taken from banks for house/flat more than 60 sq metre to 120 sq metre carpet area and 3 per cent interest subsidy on house/flat more than 120 sq metre to 150 sq metre carpet area, which was earlier 90 and 110 sq metre respectively.”
NAREDCO said that this decision of Government, besides helping in clearing unsold stock, will also encourage developers to launch new projects.
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