5 Ways Housing For All By 2022 Is Boosting The Housing Industry

The housing sector has seen a lot of development in the past few years, especially since the introduction of Housing for All by 2022. This program was announced by the Prime Minister in the year 2015. Also known as National Mission for Urban Housing, this program aims to provide housing for every Indian through different means:

• Slum rehabilitation in partnership with private builders
• Credit linked subsidy for the economically weaker sections
• Affordable housing as a part of public private partnership
• Subsidy for beneficiary led construction

The scheme was titled Pradhan Mantri Awas Yojana or PMAY. Around 15.3 million houses have been constructed under the Awas Yojana between 2014 and 2018. A fund of Rs. 60,000 crores has been set up to provide extra resources apart from the budgetary support. The steps taken by the Government after announcing this scheme too have helped the housing industry make rapid strides and provided a clear pathway to growth.

Here are the ways in which Housing for All is boosting the housing industry:

1. Infrastructure status to realty sector:

The Interim Budget in 2019 gave the affordable housing sector ‘Infrastructure’ status. This means easier access to credit which is a major hurdle that developers face while starting a new project. This status will also fast track the approval process from different departments. With most states implementing the RERA Act, new projects will have increased accountability from both the regulators and the developers.

1. Interest subvention scheme:

This is a credit linked subsidy scheme available for the economically weaker sections of the society. The PMAY scheme clearly defines the beneficiaries and the interest benefits under this scheme. The subsidy amount will directly get credited into the loan account getting applied towards principal repayment. This will in turn reduce the EMI, giving benefit to the loan applicant.

The subsidy amount depends on the income of the applicant i.e

• Income of up to 6 lakhs – subsidy of 6.5%
• Income between 6 to 12 lakhs – subsidy of 4%
• Income between 12-18 lakhs – subsidy of 3%

The scheme specifies the maximum amount of subsidy that each income group is eligible for. To get this subsidy, you need to apply under PMAY scheme at your bank.

1. Affordable housing:

Affordable housing is clearly defined under the Pradhan Mantri Awas Yojana. These houses should between 300 sq ft to 500 sq ft which cost less than Rs. 5 lakhs for the economically weaker sections. Similar definitions are given for the lower income groups and middle income groups. The number of launches for affordable housing is going up in the country and is seeing a strong demand from people.

1. Greater availability of finance:

One of the biggest benefits of the PM Awas Yojana for the developers is easier access to finance. With the push on affordable housing in different cities, housing finance companies are queuing to provide finance to this sector. With the provisions of RERA controlling the use of funds, this has meant more lenders are willing to provide credit. This is helping developers reduce the overall cost of their projects.

1. Homeowner led construction under PMAY:

There is subsidy given under Awas Yojana for beneficiary led construction. The subsidy is given in phases depending on the stage of construction. This is directly credited to the bank account of the beneficiary based on the construction stage i.e. digging foundation, construction of plinth etc.

Rudra Raghvan is an Mba student and financial advisor in Mumbai.he shares his financial experience and guides you about all your financial queries.