Cabinet hikes carpet area for affordable housing, higher demand seen | Latest News India - Hindustan Times
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Cabinet hikes carpet area for affordable housing, higher demand seen

Hindustan Times, New Delhi | ByMoushumi Das Gupta and P Suchetana Ray
Nov 16, 2017 10:35 PM IST

The carpet area of an MIG-I will increase from 90 square metres to up to 120 square metres and in MIG-II category it will increase from 110 square metre to up to 150 square metres.

In some good news for builders and middleclass homebuyers, the Union cabinet increased the carpet area of houses under the government’s affordable housing scheme on Thursday.

Realtors said the decision to increase the carpet area of MIG houses will encourage developers to launch new projects and boost economy. (HT file photo)
Realtors said the decision to increase the carpet area of MIG houses will encourage developers to launch new projects and boost economy. (HT file photo)

The decision could help homebuyers access bigger, ready-to-move-in houses at lower costs, while developers with large inventories could look forward to renewed demand, triggering a virtuous cycle employment generation and economic growth.

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The tweaks to the NDA government’s flagship housing program – Pradhan Mantri Awas Yojana (PMAY) – follows requests from the industry which was saddled with thousands of flats that had marginally bigger carpet areas than allowed under the scheme.

In the first middle income category (Rs6-12 lakh/annum), the carpet area was raised from 90 to 120 square metre (968 sq ft - 1184 sq ft). In the income category of Rs12-18 lakh/annum, the carpet area was increased from 110 sq mt to 150 sq mt (1291 sq ft – 1614 sq ft).

The eligibility criteria and interest subsidies on loans remain unchanged.

“The increase in carpet area will enable individuals under the MIG category to have a wider choice in developers’ projects. It will give a boost to the sale of ready built flats in the affordable housing segment,” Union housing and urban affairs minister Hardeep Puri told journalists.

The mushrooming of private developers from 2007 to 2013 saw landowners turn real estate companies. The obvious fall out was incomplete projects, and a breakdown of consumer and investor confidence. But realty majors said that RERA has added a positive dimension to the sector.

The affordable housing sector was given a shot in the arm by the government in its budget this year, as it gave it the status of infrastructure. This allowed tax holidays and easier access to credit for developers in this segment.

“Consumer sentiment for affordable homes has been on a rise from the past three quarters with the benefits of the changes in the real estate sector bearing fruit,” said Brotin Banerjee, CEO and MD, Tata Housing.

With the changes, the cost of a house will go up but Sriram Kalyanaraman, managing director and CEO of National Housing Bank (NHB), told HT that it would still be affordable for the MIG category.

“In a city like Aurangabad, a person with a salary of Rs 12 lakh can easily get a loan of Rs 40 lakh. With that he can easily afford to buy a house of 1184 sq. ft,” said Kalyanaraman who heads NHB, the regulator for all housing finance companies.

PMAY was initially targeted to benefit those with incomes up to Rs6 lakh a year. Last December, Prime Minister Narendra Modi announced expanded its ambit to include the middleclasses till December 2017. But in September, the government extended the scheme for the category to March 2019.

The Union finance ministry had allocated 1,000 crore under the programme. The ministry intends to target 50,000 people under the scheme in 2017-18.

“Now we will be able comfortably provide a two-bedroom house in the MIG category, the benefits under the infrastructure category that developers get will be passed on to the homebuyers,” said Pradeep Jain, founder chairman, Parsvnath Group.

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