CLSS freebie of almost Rs 2.3 lakh: Will properties under all development authorities finally make the cut?

Homebuyers wanting to buy property falling under any part of a development authority have reasons to cheer. They will soon be able to avail the benefit of around Rs 2.3 lakh to buy a house under the Prime Minister Awas Yojana (PMAY Urban) as the guidelines of the scheme will be modified to include all properties falling under any part of development authorities including villages, industrial belts and port authorities.

“All such authorities,” including port development authorities in coastal cities will soon be eligible under the PMAY guidelines, housing ministry sources said.

These changes are being made following complaints that some banks were not approving loan applications under the scheme in certain urban areas.

“Not only industrial authorities but all such authorities like seaport authority, chemical authority etc – all areas under them will soon qualify for the PMAY scheme,” they said.

In the existing guidelines, only statutory towns under Census 2011 and towns notified by the state governments are eligible for coverage under PMAY. There are more than 4,000 such towns in the census.

Banks are also hesitant to provide subsidy for towns that are not listed among the 4,300 towns. “There is still confusion with regard to which towns are covered because of which financial institutions are not pushing loans from these locations as the onus of correct data lies with the financial institution and if during audit it is found that the town is not covered under the list, the onus of recovering the money is in the institution. Therefore, they are consciously not going beyond the 4,000 locations,” says a banker.

Confusion over which towns are covered under the PMAY scheme was one of the primary reasons, besides the cap on the size of units, that the credit linked subsidy scheme (CLSS) did not kick off.

Under the PMAY scheme launched on January 1 this year, the central government gives an interest subsidy of 4 percent for loans up to Rs 9 lakh for those having household income up to Rs 12 lakh, and an interest subsidy of 3 percent for loans up to Rs 12 lakh for those with household income up to Rs 18 lakh. The scheme also provides for an interest subvention of 6.5 percent on loan of up to Rs 6 lakh for homebuyers in the economically weaker section and low-income group earning less than Rs 6 lakh a year. The entire benefit is given upfront to a buyer.

Until a few weeks ago, the limitation of the carpet area was acting as a disincentive with several buyers and builders saying that it was an artificial limit. Last week, the government  increased the carpet area under MIG-I from 90 square metre up to 120 square metre and carpet area in case of MIG 2 from 110 square metre to 150 square metre, both effective January 1, 2017. The subsidy of up to Rs 2.30 lakh on home loans under the middle-income group category 2 and Rs 2.35 lakh for MIG 1 will now be available until March 2019.