Larger houses made eligible for credit-linked subsidy

The government has increased the carpet area of houses eligible for interest subsidy under the Credit Linked Subsidy Scheme for the Middle Income Group from 90 sq metres (900 sq ft) to 120 sq metres (1,200 sq ft).

The union cabinet chaired by Prime Minister Narendra Modi on Thursday also approved an increase in the carpet area of houses eligible for interest subsidy under the CLSS for the Middle Income Group –II (MIG-II) under Pradhan Mantri AwasYojana (Urban), from 110 sq metres (1,100 sq ft) to 150 sq metres (1,500 sq ft).

The changes will be effective retrospectively from 1 January 2017, ie, the date the CLSS for MIG had become effective, says an official release.

The CLSS for MIG is a pro-active step in meeting the challenges of urban housing shortage and this move will enhance the scope, coverage and outreach of the scheme, according to the release.

The CLSS for MIG covers two income segments in the MIG, viz, Rs6,00,001 to Rs12,00,000 (MIG-I) and Rs12,00,001 to Rs18,00,000 (MIG-II) per annum. 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.

The interest subsidy will be calculated at 9 per cent NPV (net present value) over a maximum loan tenure of 20 years or the actual tenure, whichever is lesser.  Housing loans above Rs 9 lakh and Rs12 lakh will be at non-subsidized rates.

The CLSS for MIG is currently effective up to 31 March 2019.

The limit of 120 sq m and 150 sq m is seen as a reasonable enhancement and would cater to the market generally scouted by the MIG belonging to the two income categories specified in the scheme.

The increase in carpet area will enable the Ml category of individuals to have a wider choice in Developers' projects.

The increased carpet area will also give a boost to the sale of ready built flats in the affordable housing segment.