If you were planning to buy your first home in areas like Noida and Greater Noida, then here is some good news for you. Along with low property prices, now you can also avail the interest subsidy on home loans provided under the Prime Minister Awas Yojana (PMAY) to first-time home buyers. The subsidy of around Rs 2.5 lakh is given by the government at the time of taking a loan, which entails a saving of about 2200 per month on a 20-year home loan of about Rs 10 lakh. Earlier this benefit was not available to home buyers willing to buy their homes in areas which were not declared in the Census 2011 as statutory towns, nor were notified by the state governments. However, now with the guidelines having been amended by the housing ministry, even areas notified by the development authorities have become eligible for benefits provided under PMAY.
Talking about this development, Suresh Garg, Secretary, CREDAI Western UP and CMD of Nirala World, says, “We had raised our concern both with the authorities and the Urban Development Ministry during the meeting and presentation from CREDAI. Actually the names of so many areas were missing in the district and town list available with the Urban Development Ministry. For instance, the name of Gautam Budh Nagar was not there in the town category, whereas the names of Dankaur and Jewar etc. were listed like Ghaziabad, which is notified as a district as well as town in the list. But now, as per our proposal, the ministry has included Noida, Gr Noida and Yamuna Expressway as towns and this will ensure first-time home buyers to avail the benefits of PMAY.”
According to developers, another reason to cheer for home buyers is that now they can will get double benefit if they buy a ready-to-move-in home in those areas. First, they will get the benefit under PMAY and secondly, there will be less tax implication under GST. Jointly this benefit could go up to Rs 5 lakh for a housing unit costing around Rs 30-35 lakh.
Manoj Gaur, Vice President CREDAI-National & MD, Gaursons Group, informs, “Under the previous guidelines, properties in an area notified by development authorities, such as Noida and Greater Noida, were not eligible for availing the benefits of PMAY for a first-time home buyer. But now with the amendments in this clause, such regions are surely going to see a surge in both construction and demand for affordable housing. Many developers having land parcels in such regions, who have been willing to come out with affordable housing projects, will be able to do so now and we hope that all will ably participate in the Prime Minister’s ambitious initiative of Housing For All by 2022.”
Pradeep Aggarwal, Co-founder and Chairman, Signature Global, says that with the recent amendments in the guidelines for regions eligible for benefits under PMAY, the housing ministry has not only eased the path for several developers who wanted to foray into affordable housing but also brought a big relief to the first-time home buyers who will now be flooded with more and more options for their purchase. “With regions like Noida and Greater Noida now eligible for subsidy post the amendments, we are sure to see more and more projects coming up to fulfill the mission of Housing for All by 2022. Moreover, buyers will also have more regions to choose from while purchasing their first home and will also be able to avail the benefits under PMAY,” he says.
It may be noted that earlier the credit-linked subsidy scheme (CLSS) under PMAY on home loans was limited to Economic Weaker Section (EWS) and Lower Income Group (LIG). EWS and LIG section is eligible for an interest rate subsidy at the rate of 6.5% for a tenure of 20 years or whichever is lower. However, in 2017 the PMAY scheme was extended to the middle income group having income above Rs 12 lakh and up to Rs18 lakh.
Accordingly, “for income level up to Rs 12 lakh, 4% subsidy is allowed while for Rs 18-lakh income group a subsidy of 3% is allowed on home loans up to Rs 12 lakh. These subsidies will entail a saving of about 2200 per month on a 20-year loan of about 10 lakh. This subsidy will be available for housing loans available both for new construction and addition/ alteration to the existing dwelling units. As the beneficiary can opt for a unit larger than 600 sq ft, the emerging affordable areas in Noida and Greater Noida, which are driven by end-user demand, can benefit as the benefit under CLSS can boost the demand from first-time homebuyers,” says Surabhi Arora, Senior Associate Director, Research, Colliers International India.