Real estate developers and consultants expect housing sales to rise, especially in small cities, as the government has increased the carpet area to up to 200 square metre for availing interest subsidy under PMAY-U.
The government yesterday relaxed norms on carpet area by 33 per cent for getting subsidy under the Pradhan Mantri Awas Yojana-Urban (PMAY-U).
The housing and urban affairs ministry enhanced the carpet area of a house to 160 sq metre from 120 sq metre for Middle Income Group-I (MIG-I).
For MIG-II, it has been increased to 200 sq m from 150 sq m. Under the Credit Linked Subsidy Scheme (CLSS), each beneficiary can avail of subsidy up to Rs 2.35 lakh on purchase of a house.
CREDAI President Jaxay Shah tweeted that this is a government's gift to each MIG home buyer and big push for tier II-III urban housing.
Rajeev Talwar, Chairman, NAREDCO said: "The Middle Income Group segment to which these carpet sizes would cater to, is the biggest in the country, therefore, real estate activity is bound to experience a revival."
He added that it is "a tremendously impactful decision...which shall further contribute in bringing down the estimated shortage of housing in the country".
ANAROCK Property Consultants Chairman Anuj Puri said the decision is a phenomenal move to boost sales of large-sized apartments.
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 the reach of such buyers, he added.
Anshuman Magazine, Chairman, CBRE India and South East Asia, said this is a step in the right direction and would support momentum in India's housing market.
"This will not only enable more home buyers to avail the subsidies and other incentives in the scheme, but will also help bolster construction activity in the affordable housing sector in the country," he added.
Harshil Mehta, JMD & CEO, DHFL said: "The Government's announcement of increasing the sq-ft scale of residential units under the PMAY scheme, as well as the RBI's recent decision to increase the housing loan limits, reflect the government's strong intent to achieve its Housing for All mission by 2022 by enabling home ownership for every Indian."
This definitely broadens the home ownership opportunity for eligible, first home buyers under the PMAY scheme while also providing the needed impetus to the supply dynamics, he added.
Dhruv Agarwala, Group CEO, Proptiger.com, Housing.com, Makaan.com, said this is another big step to boost the construction and real estate sector. "This will mean the facilitation of higher investments in affordable housing segment which has been accepted very well in the market, both by investors and end users," he added.
Gulshan Homz Director Deepak Kapoor said this will surely boost the affordable housing development schemes, while Sikka group MD Harvinder Sikka said this decision will give a big boost to the housing sector.
Gaurav Gupta, Director, SG Estates, said the average middle class in smaller towns will be able to afford bigger and better quality homes than before and at the same time avail the benefits of CLSS under the PMAY. BDI group MD Ssumit Berry welcomed the decision and said this will now enable more customers to qualify for the subsidy.
Colliers International India Senior Associate Director, Research, Surabhi Arora said the move would make more buyers eligible for interest subsidy and will also help to reduce the inventory overhang in the housing sector.
"It seems to be a positive step to provide some respite to the middle-income group and improve the demand. However, to revive the housing sector, we need a strong demand-side push in the mid-segment, which can be done through a strong economy, thus enabling ample job opportunities and security for the buyers," she added.
Under Credit Linked Subsidy Scheme (CLSS) for MIG-I, 4 per cent interest subsidy is available on loan up to Rs 9 lakh for people with an annual income between Rs 6-12 lakh.
Interest subsidy of 3 per cent is given on loan up to Rs 12 lakh to people with income between Rs 12-18 lakh per annum.
A beneficiary can avail subsidy up to Rs 2.35 lakh, and it is applicable for the first-time home buyers till 31st March, 2019.
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