Fix LIG income ceiling at 10-12L: Credai

KOLKATA: Leading developers in Bengal want the government to fix the income criteria for low income group (LIG) housing at Rs 10-12 lakh in Kolkata and its suburbs and Rs 6 lakh for rest of the state while determining the criteria for proposed interest loan subsidy programme under the Centre's 'Housing For All' by 2020 mission.
Under the scheme, the Centre proposes to subsidize the interest on loan of up to Rs 6 lakh by 6.5%, effectively reducing the home loan interest rate to 3.5-4% for the buyer.That may translate to a saving of up to Rs 40,000 a year for a home buyer.
The Cabinet Committee on Economic Affairs in June this year approved the proposal to increase the interest subvention rates for affordable housing through credit-linked subsidy component of the ‘Housing For All’ by 2020 mission. The committee, chaired by PM Narendra Modi, accepted recommendations of an inter-ministerial committee to increase the interest subsidy to 6.5% for loans of up to Rs 6 lakh for Economically Weaker Section (EWS) and LIG beneficiaries under the mission.
If the state municipal affairs department does endorse the proposal forwarded by the Bengal chapter of Confederation of Real Estate Association of India (Credai) and its recommendation is then accepted by the Narendra Modi government, it will more than double the base of potential LIG home buyers and act as a booster shot to the placid real estate industry.
“We have had one round of talks with the state government and submitted a proposal for fixing the income level of citizens eligible to buy LIG homes and avail of the interest loan subsidy programme. The Centre has fixed the apartment carpet area to 60 sq metre or 645 sq ft (900 sq ft super-built). That means we can price flats at Rs 18-21 lakh. If an individual takes a loan of Rs 12 lakh, the person will have to pay interest at 3.5-4% on Rs 6 lakh and 10% on the remaining Rs 6 lakh,” explained Credai-Bengal chairman Sushil Mohta.
Credai-India vice-president Harsh Patodia said introduction of the programme would also enhance an individual's capacity to take a housing loan, thereby encouraging more potential home buyers to actually make the purchase.
“Once the modalities are finalized and the programme takes off, it will change the dynamics of the housing sector. Construction of affordable housing will get a boost. I believe it could result in a 15% hike in unit sales,” Patodia said.
The state had in August 2015 set Rs 3.6 lakh as the criteria for joint sector housing projects in which apartments of 500-700 sq ft built up area are priced Rs 12-16.8 lakh. However, LIG units in these projects are usually sold below cost price. High income group (HIG) apartments that are sold at a premium cross-subsidizes the LIG flats.
“The government should take a pragmatic stand in deciding the household income for LIG, particularly in this case since houses will not be cross-subsidized,” said east India head of Cushman & Wakefield.