Increase in carpet area under PMAY: The much-needed push to realty sector

There is good news for those who have bought residential accommodation after January 1, 2017 or are planning to buy a house under Pradhan Mantri Awas Yojana (PMAY). The Union cabinet has approved an increase in carpet area of houses eligible for interest subsidy under the Credit Linked Subsidy Scheme (CLSS) for the Middle Income Group (MIG) under PMAY with retrospective effect from January 1, 2017.

Under the MIG-I category, the carpet area of the houses has been increased from 90 sq metres to 120 sq metres, the carpet area under MIG-II segment has been increased from 110 sq metres to 150 sq metres.

The PMAY provides 4% interest subsidy to the beneficiaries under the MIG-I category on home loan up to Rs 9 lakh. Individuals whose annual income is between Rs 6 lakh and Rs 12 lakh belong to MIG-I category. Under the MIG-II category, individuals with annual income of Rs 12 lakh to Rs 18 lakh get an interest subsidy of 3% on home loan up to Rs 12 lakh.

The move to increase the carpet area for MIG-I and MIG-II categories has been welcomed by the buyers, developers and other stakeholders in the real estate sector.

The government’s move would ease the interest burden on home buyers and make thereby make homes more affordable for the middle income group. The middle class home aspirants will now be able to afford bigger and better quality homes. This would help push the demand for residential properties, thereby rejuvenating the real estate sector, as the increase in demand would help builders to clear their unsold stock as also encourage them to launch new projects aimed at the middle class. This would set in motion a chain of positive developments leading to generation of new employment in the real estate and related sectors, which will lead to growth in GDP and, ultimately, revival of the economy.