With the government increasing the carpet area of houses eligible for interest subsidy under the Credit Linked Subsidy Scheme (CLSS) for the middle income group beneficiaries, the number of people availing of the benefit is seen rising. Further, the move will also reduce oversupply in the housing market, industry experts said.
According to the government, an amount of `736.79 crore has so far been disbursed to 35,204 beneficiaries belonging to the MIG category. “We are expecting the number of beneficiaries belonging to MIG category to go up three times this financial year,” managing director and chief operating officer of National Housing Bank Sriram Kalyanaraman said.
In the MIG-1 category of CLSS, the carpet area has been increased from the existing 120 square metre to up to 160 square metre. The carpet area in respect of the MIG-2 category has also been raised to up to 200 square metre from the existing 150 square metre. In the MIG-1, interest subsidy of 4% is provided for loan amounts of up to `9 lakh, while for MIG-2, interest subsidy of 3% is provided for loan amount of `12 lakh.
“The whole idea is to facilitate the scheme so that more people are benefited by the subsidy. It will also have the benefit of boosting the housing offtake. It will have the double-edge benefit to both borrowers and builders,” Kalyanaraman said.
The decision of the housing and urban affairs ministry came after its had received representations from builders and homebuyers from smaller towns saying they were not eligible to get the interest benefit since the plot or the flat size was more than the earlier prescribed norms. This is the second time the government has revised the carpet area for MIG to avail of interest subsidy. In November last year, the government had revised the carpet area.
This will help clear the existing unsold housing stock in many markets, kick-start construction demand and enhance economic activity besides helping homebuyers purchase more spacious dwellings. Niranjan Hiranandani, national president of builders’ body NAREDCO, said the positive impact will be felt in peripheral areas of metro cities, along with smaller cities.
Anuj Puri, chairman of ANAROCK Property Consultants, said he expects a boom in housing demand owing to incentives offered by the government. “This change will have a significant impact on home sales in tier II and tier III cities where the land costs and therefore capital values of properties are low and larger apartments are within reach of such buyers.
Prasoon Chauhan, CEO, HomeKraft, an ATS company focusing on affordable and mid-income housing segment, said the government’s approach will reiterate customer confidence in mid and affordable housing segment as the homebuyer now can get a bigger house and enjoy interest subsidies on his home loan.
“The government’s move is a step in the right direction and will support momentum in India’s housing market. The latest relaxation will allow a large proportion of housing, particularly in tier 1 cities, to be covered under the scheme,” Anshuman Magazine, chairman, India and south-east Asia, CBRE, said.
Giving a boost to the affordable housing segment, the Reserve Bank of India earlier this month raised the home loan limits under priority sector lending from `28 lakh to `35 lakh in metros, and from `20 lakh to `25 lakh in other centres.