Affordable housing threshold may remain unchanged for now
The government has no immediate plan to reclassify the “affordable housing” segment, which is encouraged with interest subvention funded out of budget, a senior official from the ministry of housing and urban affairs (MoHUA) told FE.
“It’s possible to own a house within Rs 45-lakh bracket in nearly all the cities except Mumbai. We are not re-looking the affordable housing definition as of now,” said the oficial.
Reports had suggested that the MoHUA has sent a proposal to the finance ministry to increase the affordable housing threshold – from Rs 45 lakh currently to Rs 75 lakh. To be sure, the government defines affordable housing as a residential unit with a carpet area of 60 square metres in metros and value below Rs 45 lakh. In non-metros, the corresponding area is 90 square metres but the value remains the same.
Experts said that construction cost alone is pushing up the prices of affordable houses significantly. For instance, the minimum construction cost of a residential building in metros is Rs 3,000 per square feet. It would take over Rs 19 lakh to build a 645 sq ft (or 60 sq metres) apartment. The land cost, which is a bigger chunk of the overall cost, is over and above it.
“The actual threshold has moved up to over Rs 75 lakh in most cities. The industry has been asking for the government to reformulate the PMAY-U so that more people can benefit from the scheme. In addition, the government needs to incentivise people through tax sops,” said Ravi Shankar Singh, managing director (residential transaction services) at Colliers India.
Under the PM Awas Yojana (Urban), the largest scheme to promote affordable housing for the urban poor and slum dwellers, the households can benefit from the concessional home loan
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