Everything you Need to know about Affordable Housing in Three Minutes!
Buying a house is an important, life altering decision. The home you live in says a lot about you. In our country, it is seen as a milestone of achievements when a person buys a home. That is why, when it comes to investing in the right home for yourself, you are often offered various options and you will come across various terms that won’t make complete sense to you. One such term is affordable housing. Here is everything you need to know about affordable housing in three minutes:
Rise of Affordable Homes in India
Over the last few years, one can see various reputed builders making affordable homes a preferred category in their projects. These homes are located at prime locations, offer amenities and are classified in the category of affordable homes as they are set in the price range that can be paid by people with medium income. This shift has happened due to a lot of reasons. Recently, the Government has also announced that the GST rates in the Real Estate Sector will be cut down. This has been done to meet the boost in the housing demands that need to be met.
Affordable Housing Schemes
Low cost housing or affordable housing scheme means a scheme where houses are offered at cheaper prices to people with low income and middle income groups (MIG). We need such schemes as our population is high who in turn need homes and on the other side, the average person does not earn enough to afford homes if they are priced too high. Lots of families migrate from rural areas and semi-rural areas to cities, increasing the need for homes in the cities and towns. There are various schemes that the Government has set in place to encourage this. They are:
- Prime Minister Awas Yojna (PMAY)
- External Commercial Borrowing
- Opening up of Foreign Direct Investment
- The Central Board of Direct Taxes
Are you a Middle-Income Earner?
In order to understand if affordable housing is for you, you need to figure out if you belong to the middle-income earner group. The category of MIG (Middle-Income Group) is a category that is made of two slabs. The first slab of the MIG-I will comprise of households having an income between Rs.6, 00,001 up to Rs.12, 00,000 and MIG-II will comprise of households having an annual income between Rs.12, 00, 001 to Rs. 18, 00, 000. To put it simply, if you are earning between Rs. 6 lakh and Rs. 18 lakh per year, you can avail the benefits of subsidized loans if you meet the other conditions as well.
In order to understand this concept better, you can use the help of the following table:
|Particulars||MIG I – PMAY (U)||MIG II – PMAY (U)|
|Household Annual Income (Rs.)||6-12 lakh||12-18 lakh|
|Eligible Loan Amt for Internet Subsidy (Rs.)||9 lakh||12 lakh|
|Dwelling Unit Carpet Area||160 Sq. mt.||200 Sq. mt.|
|Max loan tenure (in yrs)||20||20|
|NPV subsidy||Rs. 2.35 lakh||Rs. 2.30 lakh|
|1 sq mt = 10.7639 sq ft|
Are you Eligible to apply for Affordable Housing?
Yes, you are if the following conditions are met:
- An Indian Citizen
- Your age is between 18 to 70 years
- Do not have your own plot/house/apartment anywhere in India
- Have not already, once, benefited from this scheme
What documents do you require in order to apply?
These are the documents you will need in order to apply for affordable housing:
- PAN Card
- Board of Resolution
- MOU (Memorandum of Understanding)
- An application form that is filled and signed
Based on the subsidies and benefits under the PMAY scheme, there is hope that there will be housing for all by 2022. The forthcoming financial budget on 5th July 2019 will most likely give a boost to the affordable housing sector.