Govt hikes carpet area for affordable housing, higher demand seen
New Delhi: In some good news for builders and middle-class homebuyers, the Union cabinet increased the carpet area of houses under the government’s affordable housing scheme on Thursday.
The decision could help homebuyers access bigger, ready-to-move-in houses at lower costs, while developers with large inventories could look forward to renewed demand, triggering a virtuous cycle of employment generation and economic growth.
The tweaks to the NDA government’s flagship housing programme—Pradhan Mantri Awas Yojana (PMAY)—follows requests from the industry which was saddled with thousands of flats that had marginally bigger carpet areas than allowed under the scheme.
In the first middle income category (Rs6-12 lakh/annum), the carpet area was raised from 90 to 120 sq. m (968 sq. ft - 1184 sq. ft).
In the income category of Rs12-18 lakh/annum, the carpet area was increased from 110 sq. m to 150 sq. mt (1291 sq. ft - 1614 sq. ft).
The eligibility criteria and interest subsidies on loans remain unchanged.
“The increase in carpet area will enable individuals under the MIG category to have a wider choice in developers’ projects. It will give a boost to the sale of ready built flats in the affordable housing segment,” Union housing and urban affairs minister Hardeep Puri told journalists.
The mushrooming of private developers from 2007 to 2013 saw landowners turn real estate companies.
The obvious fall out was incomplete projects, and a breakdown of consumer and investor confidence. But realty majors said that RERA has added a positive dimension to the sector.
The affordable housing sector was given a shot in the arm by the government in its budget this year, as it gave it the status of infrastructure.
This allowed tax holidays and easier access to credit for developers in this segment.
“Consumer sentiment for affordable homes has been on a rise from the past three quarters with the benefits of the changes in the real estate sector bearing fruit,” said Brotin Banerjee, chief executive officer (CEO) and MD, Tata Housing. With the changes, the cost of a house will go up but Sriram Kalyanaraman, managing director (MD) and CEO of National Housing Bank (NHB), told HT that it would still be affordable for the MIG category.
“In a city like Aurangabad, a person with a salary of Rs12 lakh can easily get a loan of Rs40 lakh. With that he can easily afford to buy a house of 1184 sq. ft,” said Kalyanaraman who heads NHB, the regulator for all housing finance companies. PMAY was initially targeted to benefit those with incomes up to Rs6 lakh a year.
Last December, Prime Minister Narendra Modi announced expanded its ambit to include the middle-classes till December 2017.
But in September, the government extended the scheme for the category to March 2019.
The Union finance ministry had allocated Rs1,000 crore under the programme. The ministry intends to target 50,000 people under the scheme in 2017-18.
“Now we will be able comfortably provide a two-bedroom house in the MIG category, the benefits under the infrastructure category that developers get will be passed on to the homebuyers,” said Pradeep Jain, founder chairman, Parsvnath Group.