Interest subsidy scheme for middle-income home buyers extended

If your annual income is between Rs 6-18 lakh, you now have time until March 31, 2021 to acquire your dream house and take the interest subsidy of Rs 2.3-2.35 lakh from the central government. Finance Minister Nirmala Sitharaman announced the extension of the credit-linked subsidy scheme (CLSS), which ended on March 31, 2020, during her press conference to unveil the second tranche of the Rs 20-trillion economic stimulus package.

Making affordable housing more attractive

Industry-watchers say the government’s move will give a boost to the real estate sector, as affordable housing has cornered a sizeable share of sales in the space during recent years. “There has been a significant increase in activity in the affordable segment over the last few years. There are currently 15.62 lakh under-construction units across the top seven cities, of which nearly 39 per cent are in the affordable segment priced in the under-Rs 40 lakh budget,” says Anuj Puri, Chairman, ANAROCK Property Consultants.

According to the firm’s recent report, affordable housing units accounted for around 36 per cent of the overall unsold inventory across the top seven cities, as of Q1 2020. ANAROCK has estimated that the unsold inventory in the affordable housing segment will register an annual increase of 1-2 per cent. The inventory in this segment stood at 238747 units in 2018 and 236636 units in 2019.

Part of the Pradhan Mantri Awaas Yojana (PMAY) that was originally rolled out for economically weaker and lower income groups, CLSS was extended in 2017 to include middle-income groups looking to purchase or construct their first house. This group is further divided into MIG-I households (annual income between Rs 6-12 lakh) and MIG-II households (Rs 12-18 lakh). Home-buyers opting for the scheme get a subsidy of 3-4 per cent on their home loan interest. However, it is available for loan amounts of up to Rs 9 lakh and Rs 12 Lakh for MIG-I and MIG-II households, respectively, with a tenure of up to 20 years. The additional loan amount beyond this limit has to be serviced at the non-subsidised rate. Moreover, there are restrictions on the carpet area of the housing units too. Units with carpet areas of up to 160 sq m and 200 sq m for MIG-I and MIG-II, respectively, will be eligible for taking the CLSS.