Wednesday 26th September 2018

    Mid Income Group house buyers to benefit as Govt extends CLSS by 15 months

    The Central Government’s decision to extend the Credit Linked Subsidy Scheme (CLSS) under the Pradhan Mantri Awas Yojana (PMAY)- Urban for the Middle Income Groups (MIG) by 15 months till March 2019, will help a large section of society have their own homes under the government’s plan for housing for all by 2022. Read On ..


    The scheme for the MIG section was to conclude in December 2017. Having realized that not many people got the opportunity to apply for housing loans under this scheme, the government thought it prudent to extend it further.

    Under this scheme, households in the annual income bracket of Rs 6 lakh to Rs 18 lakh can avail subsidy of upto 4%. Thus the interest burden will come down by a minimum Rs 2.30 lakh.

    Prospective house buyers and home loan companies have welcomed this move.

    "Initially I thought this scheme was for the economically weaker sections of the society. So I had ignored this scheme altogether. Recently, I came to know that it is for all house seekers. Now that the scheme has been extended I will apply for a loan shortly," said Bhaskar Naik, who works as an accountant in a private company in Mumbai.

    Jyoti Naik who works in the entertainment industry said that the extension has offered her a golden opportunity to buy a home. "I have a saving of Rs 10 lakh and considering the high prices, I was not sure to get any house within the Mumbai jurisdiction. Now that prices have softened and the government is providing subsidy, I am going for a Rs 50 lakh house."

    According to data from home loan companies more than 80% of home buyers in India avail home loans below Rs 25 lakh.

    “Most housing customers will see great benefit from the extension of the subsidy scheme. One’s home loan (interest burden) is effectively as as low as 0.30% on availing both subsidy and tax rebate applicable in the country,” said Gagan Banga, Vice Chairman, Indiabulls Housing Finance Ltd, in a statement.

    "Supply of housing stock is expected to increase as the move not only incentivizes the buyer but also reassures developers with greater sustenance for the scheme. Housing has a multiplier effect, so I am certain that the extension (of the CLSS for the MIG segment) is in the best interest of the entire economy," Mr Banga said.

    The union government after recognizing a massive housing demand and supply gap in the country, announced Housing for All by 2022 scheme in July 2015.

    The objective was to provide more than 1.9 crore houses to Indians who do not have a house of their own. A majority of these houses were required for Lower Income Groups (LIG) and Economically Weaker Sections (EWS) of the society. At the time of introduction, the CLSS for these groups for housing loans was open till 2022. But it was restricted till December 2017 for the MIG category.

    The government may be able to meet its target by 2022, but by 2030 Indian’s population is expected to grow to 1.51 billion and more houses will be needed. So a strong foundation for affordable housing will address this problem, feel analysts.

    "Affordable housing, apart from bridging the housing gap in the country will also be the next major growth driver for the economy. This segment of housing is expected to create more than 2 million jobs from now till 2022,"said Anuj Puri, Chairman, Anarock Property Consultants.

    He said during the first half of 2017, the top cities (Bangalore, Chennai, Hyderabad, Mumbai, Delhi-NCR, Pune and Kolkata) recorded more than 60% of total residential units supply in the affordable segment.

    The majority of projects in the affordable housing segment were launched in the peripheral boundaries of the top cities, largely due to non-availability of contiguous land parcels for large-scale mass housing developments and skyrocketing property prices in the central locations of our cities.

    According to Mr Puri in the first half of 2017, the share of the affordable housing segment in new launch supply increased by 16% over the 2nd half of Year 2016.

    "On the other hand, the mid and luxury segments witnessed a decrease of 4% and 9% percent respectively in the same duration," he said.

    - TradeBriefs Bureau

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