The announcement by the Reserve Bank of India (RBI) on Tuesday clarifying issues regarding ‘affordable housing’ has been welcomed by the real estate sector.
Accordingly, home loans up to Rs.50 lakh in metros and Rs.40 lakh in non-metros given by banks from the proceeds of long-term bonds of up to seven years maturity qualify as ‘affordable housing’ loans.
It was also clarified that to qualify as affordable housing, the unit price could not exceed Rs.65 lakh in metros and Rs.50 lakh in non-metros.
“The thought process behind the government and the RBI move is laudable and would definitely give a boost to the affordable housing segment,’’ said Anand Gupta, spokesman and former chairman, Builders Association of India.
It is expected that clubbing affordable housing with infrastructure and allowing priority sector lending will allow the sector to finally access cheaper funding.
“Allowing banks to raise long-term funds at cheaper rates, including through ECB, will help developers and government agencies involved in affordable housing projects to increase the supply of housing and reduce the demand-supply gap,” said Sanjay Dutt, Executive MD-South Asia, Cushman & Wakefield. “End-users will also benefit since the mortgage rates are expected to reduce for affordable units as costs reduce for banks.”
Developers are expected to launch smaller units to keep the overall ticket price within the parameters set by the RBI.
Niranjan Hiranandani, Founder and Managing Director, Hiranandani Constructions, told this correspondent that the real estate sector had found little mention for the last few years and the move came as a breather for buyers in the affordable space. “We have not ventured into the affordable housing segment yet but now we will certainly do it,” Mr. Hiranandani said without elaborating on his company’s plans.
