Central Government will give up to Rs 2.5 lakh as interest subsidy for people who take home loans to purchase their house under the Pradhan Manthri Awas Yojana, said Minister of Housing & Urban Affairs Hardeep Singh Puri.
He also revealed plans to hand over government land to private builders as part of the scheme.
Under the Yojana, an upfront payment of about Rs 2.50 lakh per house will be provided as central assistance under the Credit Linked Subsidy Component component of Pradhan Mantri Awas Yojana, the minister said at Real Estate & Infrastructure Investors Summit-2017 in Mumbai.
Central assistance of Rs.1.50 lakh per each house to be built on private lands would be provided, in case the beneficiaries do not intend to take bank loans, Puri added.
The moves are expected to give a fillip to the real estate sector, which has been suffering from slowing growth due to a rapid rise in prices over the last thirty years.
Prices of houses and property in India have been on the rise since the early 90s, and have now reached levels comparable to those in countries such as the United States.
The offers are part of the government’s PPP (public private partnership) plan to support the growth of housing in India.
Besides the above two schemes that are applicable to private projects, there are another six schemes that involve development of government-owned land.
The six models using government lands are the DBT Model, Mixed Development Cross –subsidized Housing, Annuity Based Subsidized Housing, Annuity-cum-Capital Grant Based Affordable Housing, Annuity-cum-Capital Grant Based Affordable Housing, Direct Relationship Ownership Housing and Direct Relationship Rental Housing.
Under the DBT model, private builders can design, build and transfer houses built on government lands to public authorities. Government land is to be allocated based on the least cost of construction. Payments to builders will be made by the public authority based on progress of project as per agreed upon milestones and buyers will pay to the Government.
Under the Mixed Development Cross–subsidized Housing scheme, government land will be allotted based on number of affordable houses to be built on the plot offered to private builders, cross subsidizing this segment from revenues from high end house building or commercial development.
Under the Annuity Based Subsidized Housing, builders will invest against deferred annuity payments by the Government. Land allocation to builders will be based on unit cost of construction.
The Annuity-cum-Capital Grant Based Affordable Housing involves the government paying builders a share of project cost as upfront payment.
Direct Relationship Ownership Housing involves handing over of government land to private builders, who are free to sell the flats and recover their money. “As against government mediated payments to builders and transfer of houses to beneficiaries in the above four models, under this option, promoters will directly deal with buyers and recover costs. Allocation of public land is based on unit cost of construction,” the minister said.
Under the Direct Relationship Rental Housing, recovery of the costs by builders is through rental incomes from the houses built on government lands.
Like the first two schemes, buyers of government-land properties can also avail central assistance of Rs.1.00 to Rs 2.50 lakh per house.