The middle-class Indian living in cities has long been dreaming of buying his/her own home and usually, ends up striving to realise this dream. Affordability is a major hindrance that prevents them from attaining the goal. Luckily, in the 2018-19 union budget, the government of India has now made this struggle easier by setting up the Affordable Housing Fund (AFH). The AHF is a huge step as the government will provide each buyer linked credit worth Rs 1 lakh to Rs 2.30 lakh; this loan will be provided at an interest rate of 6.5 per cent against the current market’s housing interest at 10.5 per cent. Finance Minister Arun Jaitley assured that 31 lakh affordable homes will be built for the common man residing in urban areas in his 2018-19 budget speech. The AHF has been set up under the National Housing Bank (NHB), which will play a key role in identifying and distributing these subsidies in the form of credit and lowered interest rates.

One of the officials who believes that this will now take away the focus of private developers from luxury projects to affordable housing is the chairman of Maharashtra Real Estate Regulatory Authority, Gautam Chatterjee.

Speaking with our representative, Chatterjee expresses, “Until now, the private developers would look at affordable housing as a job of the Delhi Development Authority (DDA) in Delhi or the Maharashtra Housing And Development Authority (MHADA) in Maharashtra. But now, post the announcement and the realisation that luxury homes have not gained them enough profits, they are now turning to the middle-income consumer.”

Informing that this change in psyche has been increasing among developers, he further adds, “I think that with some pressure from RERA, we will see private developers targeting this largely untouched market in urban as well as rural areas.” The affordable housing scheme is officially named Pradhan Mantri Awas Yojna (PMAY) and was declared last year with the hopeful tagline of ‘Housing for all by 2022’.

C.E.O. of PTOPRTYALWAYS.COM, Arun Sharma feels that some of the tax incentives provided in the affordable housing segment might give the thrust to the slow-paced housing activity over the past few years.

Sharma says, “Apart from tax incentives, the increase in carpet area, granting of infrastructure status as well as the setting up of a dedicated fund for housing under the NHB, indicate that the segment could expect greater capital inflows and participation from private players, going forward.”

Some research into the scheme until now have shown positive results; for example, sales in trendsetting markets like Mumbai, NCR, Bengaluru, Pune, Chennai and Hyderabad have totalled upto 64, 781 homes during the quarter, according to data from Liases Foras Real Estate Real Estate Rating & Research.

At the same time, industry insiders feel that the industry now must also have the awareness that the benefits of the PMAY will now go beyond Tier-2 cities and will touch the peripheral areas.

Pankaj Kapoor, MD of Liases Foras Real Estate Rating & Research Pvt Ltd says, “I feel that ‘smaller’ cities display much more potential as compared to a large city in terms of affordable housing as the plan is aimed nationally and not just for the already developed cities.”


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