Government stresses on affordable housing

Finance Minister Nirmala Sitharaman has addressed the housing finance industry and real estate sector, both from the supply and the demand sides.

Great emphasis has been given to affordable housing under the Pradhan Mantri Awas Yojana (PMAY), with 1.5 crore houses having been built during the last 5 years.

There will be stupendous work during 2019-20 as part of Phase-II, where 1.95 crore houses are being built, with amenities such as LPG.

The allotment will be on direct benefit transfer (DBT), with the average amount of time for the construction of a house being brought down from 314 days in 2015-16 to 114 days now.

Under PMAY urban housing, 81.4 lakh houses were sanctioned with a Rs 4.83 lakh crore outlay. 47 lakh houses were constructed, 26 lakh are under construction and the rest have been handed over.

A new innovative construction technology is aiding the mission to accomplish the prime minister’s pet programme of ‘Housing for all by 2022’.

To push home loan buyers under the affordable segment, income tax rebate under home loan interest has been extended from Rs 2 lakh to Rs 3.5 lakh in sync, with the outer cap of Rs 45 lakh for cost of the apartment.

Parallelly, borrowers and beneficiaries can avail PMAY Cash Linked Subsidy (CLSS) subject to fulfilment of criteria: first house and loans availed by March 31, 2020.

To augment the affordable housing stock, with land being scarce or available only in the periphery of cities, the finance minister has announced a path-breaking decision to release excess land parcels held by public institutions such as railways, ports, airports and extra civic-amenity lands.

Affordable housing projects will be taken up by respective state governments under a joint development agreement (JDA) with builders.So, affordable housing projects will come up within the cities, which will attract buyers, and thus, there will be a multiplier effect on construction activity, loans, investment and employment.

The builders who undertake such projects will continue to get 100% tax benefit on profits earned. To promote rental housing, the government has mooted a model rental agreement, as the existing laws are archaic.

The most critical policy decision has been to delink Housing Finance Companies from the control of the National Housing Bank. HFCs will now come under the regulation and supervision of the RBI. NHB will take care of refinance aspects and recovery. Recognising the crucial role that NBFCs play in boosting capital formation, the government has come out with a scheme to provide a one-time partial credit guarantee to public sector banks to buy high rated (AA) pooled assets of sound and prudent NBFCs — allocation of Rs 1 lakh crore has been earmarked to this effect for the present financial year. The guarantee will be for the first loss up to 10%.

Except for the long-standing demand of an industry status to real estate sector, most of the woes of the housing finance-real estate industry have been addressed.

(The author is a Bengaluru-based banker)