The Indian economy is arguably the world’s fastest growing economy or one of the world’s 3 fastest growing economies with our GDP growth of approx. 7% as per the new methods of measuring the same (previously 5.5%). While the property prices are touching the sky, to live in a city like Mumbai in a luxury flat with modern all amenities is a dream for each of us now. To make this possible the Government has come up with different schemes like affordable housing fund and lower Goods and Service tax (GST). Another step by the Government for flat buyers is the Pradhan Mantri Awas Yojana (PMAY) earlier known as Housing for all which provides financial support to people who can’t bear the entire cost of building a residential property. As the developers and buyers wanted a lower price of Good and service tax (GST) on residential properties, the government in responding to these requests and based on GST council’s recommendations changed the number by 6, now instead of 18% of GST, 12% will be applicable, to the two-thirds value of under-construction properties in the low-cost and middle-income group categories (this is a recent change done under the PMAY act). The Real Estate Regulation (and Development) Act, also known as RERA, which is now into effect is giving the flat buyers a lot more confidence, empowered with information and well-protected to make the non-serious players disappear from residential real estate industry.

Recently, in June some more changes more came in, the Carpet Area for MIG under PMAY The Ministry of Housing and Urban Affairs agreed on the revision of the carpet area of house eligible for interest subsidy under the Credit-Linked Subsidy Scheme (CLSS) for the Middle-Income Group (MIG) under PMAY. The revision changes with effect from January 1, 2019, i.e. from the date when the scheme became operational, the ministry revised the carpet area by “MIG I from up to 120 square meter to be increased to up to 160 square metre and, in respect of MIG II from up to 150 square meter to up to 200 square metre”. Under the CLSS, each beneficiary can avail subsidy up to Rs 2.35 Lakh on purchase of a house under the scheme; Under MIG-I, 4 per cent interest subsidy is offered on loan up to Rs 9 lakh for people with an annual income between Rs 6-12 Lakh, while 3 per cent interest subsidy is given on loan up to Rs 12 Lakh to people with income between Rs 12-18 Lakh per annum.

The new changes will now let more MIG customers to be eligible for subsidy and enjoy more benefits provided under the Pradhan Mantri Awas Yojana-Urban (PMAY-U).   The improvement in carpet area will also increase the construction action and will give a drive to housing sector. The changes seem to be a positive step to provide some relief to middle-income group and pick up 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.

–          By Rajeev Jain, Director, NIRMAL