Hike in carpet area to help middle income buyers: Realtors

Joann Johnston
November 18, 2017

"This decision of government, besides helping in clearing unsold stock, will also encourage developers to launch new projects and boost economy, GDP growth and employment", they said, adding that the move would now bring the entire demand for affordable housing under the interest subvention scheme.

With the carpet area of medium income group (MIG) flats eligible for subsidy under the Credit Linked Subsidy Scheme being increased, the base of buyers wanting to purchase property is expected to broaden.

Similarly, under the MIG-II category, the beneficiaries with an annual income of Rs 12-18 lakh get an interest subsidy of three per cent on a loan of up to Rs 12 lakh.

Rajesh Krishnan, Founder & CEO, Brick Eagle- a platform for affordable housing, said, "The government decision to enhance the classification of affordable housing by extending the carpet area to a maximum of up to 150 metres (over 1,600 sq feet) translates into ticket size of ₹40-100 lakh".

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It has also approved of increasing the carpet area in the MIG I category of CLSS from the existing 90 square metre to "up to 120 square metre" and increasing the carpet area in respect of MIG II category of CLSS from the existing 110 square metre to "up to 150 square metre".

For the MIG-I category, a four-per cent interest subsidy is provided to the beneficiaries with an annual income of Rs 6-12 lakh on a loan of up to Rs 9 lakh. Housing loans above Rs 9 lakh and Rs12 lakh will be at non-subsidized rates. "This decision will now bring the entire demand for affordable housing under the interest subvention scheme, accounting for nearly 96 per cent of the total demand for housing in the country", said Rajeev Talwar, chairman and Niranjan Hiranandani president, National Real Estate Development Council. In the MIG-1, an interest subsidy of 4 per cent has been provided for loan amounts up to Rs9 lakh while in MIG-2, an interest subsidy of 3 per cent has been provided for loan amount of Rs12 lakh.

"This move will allowing homebuyers to avail the interest subsidy scheme under Credit Linked Subsidy Scheme for larger houses", a senior official said. It further said that CLSS for MIG would be effective up to March 31, 2019.

Gagan Banga, VC and MD Indiabulls Housing Finance Ltd, said the Cabinet's decision is a massive positive for the macros of housing.

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