Realty industry welcomes decision; says homes now within reach of more buyers.

The real estate industry has welcomed the decision of the Ministry of Housing and Urban Affairs to increase the carpet area of flats for Middle Income Group (MIG) categories under the Pradhan Mantri Awas Yojana (PMAY) by up to 33 per cent, while making them interest-subsidy beneficiaries under the scheme.

The MoHUA on Tuesday announced the decision to widen the scope of eligibility for claiming subsidy under the Credit Linked Subsidy Scheme (CLSS) in the two MIG categories to provide a boost to affordable housing in metro cities as well as Tier I and Tier II cities.

Launched under the PMAY, CLSS offers interest subsidy on loans for the purchase or construction of a house for Economically Weaker Sections, Low Income Groups and Middle Income Groups I and II.

The carpet area for MIG-I category was increased from 120 sq m to 160 sq m, and the area for the MIG-II category was increased from 150 sq m to 200 sq m. MIG-I category is applicable to families with an annual household income between Rs 6 and Rs 12 lakh, while the MIG-II group consists of those with an annual income between Rs 12 and Rs 18 lakh. On a loan amount of Rs 9 lakh, the upfront subsidy amount for MiG-I is Rs 2.35 lakh under the new norms, while on a loan of Rs 12 lakh, the upfront subsidy amount is Rs 2.30 lakh.

Dr Niranjan Hiranandani, National President, National Real Estate Development Council (NAREDCO) expressed happiness that the recommendation by Naredco to remove the cap on the carpet area for MIG found positive response from the government. “This will create positive sentiment, enhance off-take of homes in MIG - the largest among residential real estate segments – with obvious positives in form of growth for the housing sector,” he said.

He said the move will directly contribute to improved demand, boost construction activity and result in enhanced housing supply. It would also boost job creation, and have a cascading effect on core sectors like cement and steel, he said.

Describing the move to tweak the elibility criteria for MIG groups as a “phenomenal” move, Anuj Puri, chairman, Anarock Property Consultants said “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. The timing of this increase in carpet area eligibility norms is perfect, as the RBI recently decided to revise the housing loan limits for Priority Sector Lending (PSL). The eligibility under PSL has been revised from Rs 20 lakh to Rs 25 lakh in cities other than metros.”