Home Buyers To Get Interest Subsidy For Bigger Carpet Area Under PMAY  

Carpet Area

Published on: Jun 15, 2018 @ 11:43                                                                                                                                   

The  Government  on  Tuesday  has  increased  the  carpet  area  of  houses  eligible  for  interest subsidy  under  the Prime  Minister  Awas  Yojana – Urban (PMAY-U)  for  the  Middle-Income Group  by  33 per cent. With  a  goal  of Housing  for  All  by  2022, the  decision  to  increase  carpet  area  for  MIG  is  another  big  step  to  boost  the  urban  housing  sector.

The  carpet  area  of  a  house  has  been  revised  by  the  Housing  and  Urban  Affairs  Ministry. Now  it  has  been  enhanced  to  160  square  meters  (1722 sq ft)  from  existing  120  square meters  for  Middle-Income  Groups-I (MIG-I), while  the  same  has  been  increased  to  200 square meters  (2153 sq ft)  from  existing  150  square meters  for  Middle-Income  Group-II (MIG-II).

The  interest  subsidy  under  PMAY  is  available  in  different  categories  for  first-time  home buyers. Individuals  with  annual  household  income  between  Rs 6 lakh  and  Rs 12 lakh  have been  put  under  MIG-I  category, while those  earning  between  Rs 12 lakh  and  Rs 18 lakh  fall under  MIG-II  segment.

The  government  provides  4  percent  interest  subsidy   on  a  loan  up  to Rs 9  lakh  for  MIG-I home  buyers  and  3 percent  interest  subsidy on  a  loan  up  to  Rs 12 lakh  for  MIG-II  home  buyers  for  a  maximum  loan  tenure  of 20  years. Loan  amount  beyond  this  limit  will  be  at  non-subsidized  rates.

As  per  the  scheme, if  your  annual  income  is  up  to  Rs 18 lakh, you  can  avail  the  benefit  of Rs 2.3 lakh upfront  interest  subsidy  for  a  house  measuring  up  to  2153  square  feet.  This means, if  your  annual  income  is  between Rs 12  to  Rs 18 lakh  per  annum, you  can  now  buy a  house  measuring  up  to  2,153  sq ft  for  being  eligible  for Rs 2.3 lakh  interest  subsidy  under the  PMAY-U  scheme. Similarly, if  you  are  earning  between  Rs 6  to  2 lakh  per  annum, you can  buy  a  house  up  to 1,722  sq ft  or  160 sq metres  for  being  eligible  for  interest  subsidy  of Rs 2.35 lakh  under  the  scheme.

This  is  for  the  second  time  the  government  has  revised  the  scheme  for  MIG  to  avail  interest  subsidy. The scope  of  the  Credit  Linked  Subsidy  Scheme  (CLSS)  was  expanded  to MIG  category  with  the  approval  of  the cabinet  in  February  2017. This  scheme  initially  approved  for  implementation  for  the  year  2017  has  been  extended  up  to  March  2019.

Timing  of  this  decision  to  increase  carpet  area  eligibility  norms  is  in  sync  with  the  recent RBI’s decision  to  revise  the  housing  loan  limits  for  Priority  Sector Lending  (PSL)  eligibility. RBI  in  its  last  week’s  policy  increased  the  housing  loan  limits  for  PSL  eligibility  from existing  Rs 28 lakh  to  Rs 35 lakh  in  metropolitan centers  and  from  Rs 20 lakh  to  Rs 25 lakh in  other  centers  provided  the  overall  cost  of  the  dwelling  unit  in the  metropolitan  and  at non-metro  areas  does  not  exceed  Rs 45 lakh  and  Rs 30 lakh  respectively.

These  enhancements  will  now  enable  more  MIG  customers  to  qualify  for  subsidy  and  avail  the  benefits provided  under  the  scheme. Moreover, this  is  another  step  in  the  direction  of expanding  the  beneficiary  base  for  government  schemes  to  promote  the  housing  sector  in  the  urban  cities  as  well  as  small  towns  where  housing  cost  is  less  compared  to  large  metro cities.

Apart  from  increasing  the  number  of  beneficiaries, the  enhancement  in  carpet  area  will  increase  the construction  activity  and  will  give  a  push  to  the  housing  sector  in  the  country. So, this  is  a  good  move  that will  attract  more  beneficiaries  under  its  fold  and  help  to  achieve  the  target  of  ‘Housing  for  All’  by  2022.

 

Ajay Verma

Ajay Verma, founder and writer of TheHousingWorld, a real estate and mortgage news website. He has over fifteen years of rich experience in the above mentioned industries.

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