V Nagarajan

In the COVID-19 era, India’s federal government has given a big boost to the affordable housing sector by extending the interest rate subsidy on home loans under the Credit Linked Subsidy Scheme (CLSS) till March 31, 2021.

The scheme which was made applicable for those earning between Rs0.6 million and Rs1.8 million per annum ended on March 31, 2020. The government expects that the subsidy will give a whopping Rs700 billion boost to the housing sector.

What is significant is that the Credit Linked Subsidy Scheme (CLSS) for Middle income group (MIG) enhanced the carpet area of houses eligible for interest subsidy under CLSS for MIG has been further increased to 160 sq mtr for MIG-I and 200 sq mtr for MIG-II. The time frame of CLSS for MIG has also been extended by 12 months up to 31.03.2021. This came at a time when the residential market is still struggling to clear the unsold inventory.

India’s housing shortage in the urban areas has been estimated at 18.78 million units, out of which 96 per cent was in the EWS and LIG segment. Total housing shortage is projected to be about 38 million by 2030, according to Ministry of Housing and Urban Affairs.

Under the CLSS scheme which comes under the Pradhan Mantri Awas Yojana (PMAY), middle income beneficiaries with annual income of Rs0.6 million to Rs1.2 million (MIG I) will get an interest subsidy of 4 per cent on a loan amount upto Rs0.9 million. Those with annual income of more than Rs1.2 million and upto Rs 1.8 million (MIG II), will get an interest subsidy of 3 per cent upto a loan amount of Rs1.2 million even if the total loan amount is higher. One can avail additional loan but at non-subsidised rates. The maximum subsidy amount available ranges from Rs2.30 lakh to Rs2.67 lakh depending on the category. The loan is available for families where none of the family members own a house.

Under the scheme, homebuyers including NRIs will be able to buy larger apartments as units upto 200 sqm has been brought under affordable housing category now. Home loans are available from banks, housing finance companies and other lending institutions for acquisition or construction of a house. The benefit is available even to buy resale properties.

According to Anarock property consultants, there are over 6.1 lakh affordable units under construction across India’s top seven cities. Industry experts feel that despite government’s boost to the affordable housing, the sector will be impacted by the current COVID-19 outbreak. The target audience typically has limited income and unemployment fears currently loom large. This could result in deferred property purchase decisions in 2020 and ultimately derail the segments’ growth momentum. As a result, unsold affordable stock can rise by 1-2 per cent on a y-o-y basis.

I have invested in land coming under the Panchayat approval with a developer who visited Gulf recently. But there are reports that it may be acquired if the government wishes to do so. The developer is not responding to queries and what is the remedy available now. Sanju, Sharjah.

You will have to check whether ‘patta’ (a revenue record document) would be obtained from the appropriate authorities which will safeguard your ownership in future. Any state government has a right to acquire land for public purpose if they wish to do so. However, suitable compensation would be paid to you on the government guideline value of the property. The government’s acquisition also depends on the specific purpose for which they may proceed like expansion of road or industrial estate or other public purposes. So there is no need to worry now as the acquisition may not happen even if the government is not able to acquire large areas of land.

My relative settled in London is planning to gift the commercial property located in India. Are there any restrictions in this regard? Anand Ram, Dubai.

There are no restrictions at all as the Reserve Bank has given general permission to Persons of Indian Origin to transfer residential or commercial property in India by way of gift to a person resident in India or to a person resident outside India, who is a citizen of India or to a person of Indian origin resident outside India.