The much talked about Pradhan Mantri Awas Yojana (PMAI) is an ambitious project aimed at housing every citizen of India. We elaborates on the flagship housing project and the incentives assured by the government under the scheme. The vision of Prime Minister, Narendra Modi, to ensure housing for all not only gave hope to people who refrained from investing in real estate sector owing to high costs, but also stirred positive sentiments amongst builders and developers. Launched on June 1, 2015, the Pradhan Mantri Awas Yojana (PMAY) scheme, aimed to offer pucca affordable housing options to urban and rural poor. In order to aid the efficient development of low-cost homes, the scheme embraced a plethora of incentivising offers for developers, which targeted at helping them to tide over their financial instabilities.
The ambitious project incorporates multiple plans and solutions to benefit all stakeholders involved. Let us delve further into it to understand the key features of the scheme and how it would benefit homebuyers and the real estate industry at large.
What is PMAY all about?
PMAY is an initiative undertaken by the Central government for providing affordable housing options for Lower Income Groups (LIG) and Economically Weaker Sections (EWS).
The scheme was originally rolled out for only the LIG and EWS homebuyers, however, it has now been extended to the Middle Income Group (MIG) consumers as well. Opining on the expansion of PMAY, Rohit Poddar, MD, Poddar Housing and development Ltd shares that it is practical to include MIG under the realm of the project as the definition of affordable housing in Tier II and Tier III cities does not restrict to only 30 sq m units, but also includes bigger 2BHK units. Therefore, the extension to 90 sq m and 110 sq m is a well-contemplated and important decision undertaken by the government. In an attempt to ensure faster completion, the mammoth project is divided into two parts - PMAY-Urban and PMAY-Gramin.
1. Under PMAY-Urban, the focus is on congested slums, where temporary housing units will be replaced with pucca or permanent houses and will be delivered to the slum residents and other groups hailing from LIG, EWS and MIG segments.
2. PMAY-Gramin, the scheme extends to rural areas. Those living on rent or owning a house that entails construction can apply to this scheme Credit Linked Subsidy Scheme (CLSS) Basically, there are two key features of PMAY scheme - First, it will offer affordable permanent housing to LIG, EWS and MIG segments. Second, it has introduced Credit Linked Subsidy Scheme (CLSS) on loans availed for construction, extension and improvement of existing houses.
2. PMAY-Gramin, the scheme extends to rural areas. Those living on rent or owning a house that entails construction can apply to this scheme Credit Linked Subsidy Scheme (CLSS) Basically, there are two key features of PMAY scheme - First, it will offer affordable permanent housing to LIG, EWS and MIG segments. Second, it has introduced Credit Linked Subsidy Scheme (CLSS) on loans availed for construction, extension and improvement of existing houses.
Eligibility criteria for CLSS
1. The beneficiary should not own a pucca house in his/her or in the name of any member of his/her family in any part of India
2. In case of a married coupler either of the spouse or both of themin joint ownership will be eligible for a single subsidy
3. The beneficiary should have not availed central assistance under any housing scheme from the government or any benefit under PMAY earlier
2. In case of a married coupler either of the spouse or both of themin joint ownership will be eligible for a single subsidy
3. The beneficiary should have not availed central assistance under any housing scheme from the government or any benefit under PMAY earlier
Who will be the beneficiaries under CLSS?
The beneficiary family will include wife, husband and unmarried children. (An adult who is an earning member regardless of the marital status can be treated as a separate household in MIG category).
Credits : 99acres.com
*Women ownership is not required for loan availed on construction and extension of the house
** For MIG-1 and 2 loan should be approved on and after 1/1/2017
*Source- HDFC
** For MIG-1 and 2 loan should be approved on and after 1/1/2017
*Source- HDFC
Important facts
1. Interest subsidy will be available maximum for 20 years or the loan tenure, whichever is lower
2. The cost of affordable residential property for MIG should be less than Rs 65 lakh in six metros and Rs 50 lakh in non-metros
2. The cost of affordable residential property for MIG should be less than Rs 65 lakh in six metros and Rs 50 lakh in non-metros
Why is PMAY important?
While quarterly report cards of popular metros reflect huge inventory overhang, the overall country exhibits a shortage of 20 million housing units and PMAY is an initiative to cater the shortfall.
Previously, with conventional project approval processes, it did not make much commercial and financial sense for entrenched developers to construct affordable homes as capital carrying cost remained onerous. Besides, there were no incentives for any stakeholder in the entire chain, resulting in much lower margins than anticipated. It is only for the last 1-2 years that such enabler policies have been put in place to encourage developers. Infrastructure status grant to affordable sector in the Budget 2017-18 has also been an encouraging move which would help developers in improving their credit off-take and have easy access to cheaper institutional financing. Overall, the affordable housing segment is set to scale sustainable growth trajectory on account of increased investments from FDI, insurance funds and increased participation of private players.
Challenges on the way
Single window clearance remains the biggest challenge ahead for the developers and builders. Several approvals at different stages of development not only lead to project delays but also add to total construction costs. Moreover, land being a limited resource, is also a major deterrent. While the government is mulling to unlock land parcels under its ambit, there still remain certain political and environmental limitations to overcome.
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Source - 99acres.com
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