Gudi Padwa, the first day of the Chaitra month that marks the New Year’s day of the Hindu calendar and which falls on 18 March this year, is traditionally considered an auspicious time to invest in real estate. Regarded as a time of renewal, this festival coincides with Punjab’s baisakhi, Tamil Nadu’s puthandu, Andhra Pradesh’s yugadi and Kerala’s vishu.
While market sentiment is at present dull for investing in housing, the government is hoping to energise this sector and also make affordable housing available to the urban poor through its flagship scheme that it has branded Housing for all by 2022. This groundbreaking – and hugely ambitious – initiative was launched in “Mission mode” in June 2015 by the Union Ministry of Housing and Urban Poverty Alleviation (MoHUPA) with the vision to provide Housing for All by 2022, when the nation completes 75 years of its Independence. The mission has been brought under the Pradhan Mantri Awas Yojana (PMAY) that envisages homes to 1.8 crore households in urban India and nearly 3 crore households in rural India during the 2015-2022 period.
Belying government expectations, the scheme, which has been apportioned Rs 11,169 crore, with central assistance of Rs 2,797 crore, has floundered. Though the programme is halfway through its term, only about 4.13 lakh houses for the urban poor have hitherto been constructed of the 30.76 lakh houses sanctioned by the Ministry, according to Union Housing Minister Hardeep Singh Puri. In all, 15.65 lakh houses are currently in various stages of construction.
In an effort to revitalise the programme, the union cabinet on 20 February approved the creation of a fund of Rs60,000 crore under the National Urban Housing Fund (NUHF) to finance the PMAY (Urban) scheme over the next four years. Puri noted that this measure would “add momentum to the pace of implementation” of the flagship scheme. A committee is being constituted in the Ministry and will be chaired by the joint secretary/mission director of PMAY (Urban) to operationalise and monitor the NUHF.
Housing for All by 2022 aims at:
a) Rehabilitating slum-dwellers through the participation of private developers using land as a resource;
b) Promoting affordable housing for weaker sections through credit-linked subsidy;
c) Providing affordable housing in partnership with the public and private sectors;
d) Providing subsidy for beneficiary-led individual house construction or enhancement.
These objectives are to be met by 31 March 2022.
The Mission will provide central assistance to the implementing agencies through States and Union Territories (UTs) and will be implemented as a Centrally Sponsored Scheme (CSS), except for the component of credit-linked subsidy, which will be implemented as a Central Sector Scheme. It defines a slum as a compact area of at least 300 people or about 60 to 70 households of poorly-built congested tenements in unhygienic environment, usually beset with inadequate infrastructure and lacking in proper sanitary and drinking water facilities. The beneficiaries will include the Economically Weaker Section (EWS), Low Income Groups (LIGs) and Middle Income Groups (MIGs), the annual income cap fixed at Rs3 lakh for EWS, Rs3 to 6 lakh for LIG, and Rs 6 to 18 lakh for MIG. While the EWS category of beneficiaries is eligible for assistance in all four verticals of the missions, the LIG and MIG categories are only eligible under the Credit-Linked Subsidy Scheme (CLSS) of the Mission.
A beneficiary family will comprise husband, wife, unmarried sons and/or unmarried daughters and one that does not own a pucca house in any part of India. For identification as an EWS or a LIG beneficiary, an individual loan applicant will need to submit a self-certificate or affidavit as proof of income, and States and UTs may decide at their discretion on a cut-off date on which the beneficiaries would need to be resident of an urban area for being eligible for the scheme.
The CLSS enables EWS and LIG beneficiaries to seek housing loans from banks, housing finance companies and other such institutions for new construction and enhancement to their existing dwellings as incremental housing. Small Finance Banks, Non-Banking Finance Companies and Micro-Finance Institutions have also been recognized to function as Primary Lending Institutions (PLIs) to widen the scope of implementation of CLSS (MIG), in addition to Scheduled Commercial Banks, Housing Finance Companies, Regional Rural Banks, and State and Urban Cooperative Banks for accepting applications directly from the beneficiaries and advancing loans to them under the scheme.
Beneficiaries eligible for interest subsidy under CLSS can directly apply to the PLIs, which, after due verification of applications, will sanction the loans. These institutions can thereafter claim subsidy from the National Housing Bank (NHB) and the Housing and Urban Development Corporation (HUDCO) that have been designated as Central Nodal Agencies (CNAs) for implementing the CLSS for the MIG and EWS/LIG beneficiaries. These beneficiaries would subsequently reimburse the interest subsidy to the PLIs as per the loans they have secured.
The credit-linked subsidy will be available only for loan amounts up to Rs 6 lakh and such loans will be eligible for an interest subsidy at the rate of 6.5 per cent for tenure of 20 years or during the tenure of the loan, whichever is lower. The total interest subsidy available to each beneficiary will be Rs 2.30 lakh. The Net Present Value (NPV) of the interest subsidy will be calculated at a discount rate of 9 per cent. Any additional loans beyond Rs6 lakh will be at non-subsidised rates. The interest subsidy will be credited up-front to the loan accounts of the beneficiaries through lending institutions that is designed to reduce the effective housing loan and its Equated Monthly Installment (EMI).
Each of the houses will have a carpet area of up to 30 square metres (sq m) – 322.8 square feet (sq ft) – for the EWS category and up to 60 sq m (645.6 sq ft) for the LIG category. Any carpet area exceeding the respective limits will render ineligible the targeted beneficiaries. The scheme gives preference to manual scavengers, women (with overriding preference to widows), transgenders, and persons belonging to Scheduled Castes, Scheduled Tribes, Other Backward Classes, and Minorities. These beneficiaries are not liable for any processing charge for housing loans up to Rs 6 lakh, though the normal processing fees will be charged by the Primary Lending Institutions (PLIs) for additional loan amounts beyond Rs 6 lakh.
From 1 January 2017, the Credit-Linked Subsidy Scheme has been extended to MIG candidates for fulfilling the aspirations of the large tax-paying middle class population to own pucca houses. This new CLSS can be availed of by MIG applicants with annual incomes between Rs 6 lakh and Rs 18 lakh. Those who have been sanctioned housing loans and whose applications are under consideration since 1 January 2017 are also eligible for the interest subsidy.
Apart from the beneficiary family as defined under the EWS and LIG categories, young unmarried and earning MIG adults are also eligible for the new CLSS for acquiring or constructing a new house as well as for repurchase. Preference is to be given to women (with overriding preference to widows), single working women, differently abled and transgender persons, and those belonging to Scheduled Castes, Scheduled Tribes and Backward Classes.
The total interest subsidy accruing on these loan amounts will be paid to the beneficiaries up-front and in one go in order to reduce the EMI burden. The total interest subsidies for MIG applicants on loans of Rs 9 lakh come to Rs 2.35 lakh and on loans of Rs 12 lakh, Rs 2.30 lakh. Loan tenure is of 20 years or that preferred by the beneficiary, whichever is lower.
The Mission will provide financial assistance at the rate of Rs 1.5 lakh per EWS house built under these different partnerships by the States, Cities, or UTs. While an affordable housing project can be a mix of houses for all the categories, it will be eligible for central assistance only if a single project has at least 250 houses and if at least 35 per cent of the houses are for the EWS category. Individual eligible families from the EWS category that either construct new houses or enhance their existing homes are eligible for central assistance of Rs 1.5 lakh.
A minimum addition of 9 sq m (96.84 sq ft) of carpet area to the existing house will be required to be eligible for Central assistance under the ‘Beneficiary-Led Construction’ component of the housing mission. A beneficiary desirous of availing this assistance may approach the ULBs (Urban Local Bodies) with adequate documentation regarding the availability of land owned by them. Such beneficiaries may be residing either in slums or outside the slums. Beneficiaries in slums that are not being redeveloped can be covered under this component if beneficiaries have a kutcha or semi-pucca house. Central assistance will be released to the bank accounts of beneficiaries identified in projects through States or UTs as per recommendations of State or UT.
Maharashtra Gujarat, Tamil Nadu, Karnataka, Haryana, Odisha, Kerala and Uttarakhand are some of the states that will be benefitted under this scheme. While Maharashtra is building 12,123 houses in 13 cities and towns at an investment of Rs 86,800 crore (Rs 18,200 crore of that through Central assistance), Gujarat is constructing 15,584 houses in 45 cities and towns at a cost of Rs 94,600 crore, with Central assistance of Rs 23,400 crore, and Haryana is creating 53,290 houses in 38 cities and towns with an investment of Rs 43,220 crore (Central assistance of Rs 7,990 crore).