The much-publicised ‘Housing for All’ scheme, the government’s initiative to provide access to affordable housing for the urban poor can be a potential game-changer for the Indian real estate sector.
The scheme is to be launched by the Prime Minister Narendra Modi on June 25 with the objective of making available two crore homes in India’s urban areas.
“What is essential to achieve this is a fast-tracked approval process, financial empowerment of the low-income categories to enable them to purchase a house in such areas — and unlocking land for creating affordable housing,” Anuj Puri, Chairman and Country Head, JLL India, a leading real estate consultancy said.
As per the scheme’s credit-linked subsidy, a borrower can claim 6.5 per cent interest subsidy for up to 15-year housing loans with a maximum subsidy NPV (net present value) of Rs.2.30 lakh, which translates into loan principal amount of Rs.6.5-7 lakh. Besides, hiking the income limits for the economically weaker sections (EWS) and low income group (LIG) categories will ensure that a more significant chunk of the urban poor can be covered under the scheme.
The scheme aims to equip urban poor with the wherewithal to own affordable homes. In the next step, the ministry is to formulate guidelines along with the Reserve Bank of India (RBI) to allow execution by banks.
There are several issues that confront the realty sector like funding for the developers, infrastructure status for it and a separate dedicated single-window for affordable housing projects, Sunil Mantri, NAREDCO said. “But directionally the scheme is good and can be a game-changer if expected reforms follow and are pursued at the state level.”
Brotin Banerjee, Managing Director and CEO, Tata Housing Development Company, said: “The approval of ‘Housing for All’ could be a precursor to introducing key reforms for the real estate sector.”
