Budget 2020 puts further emphasis on PMAY-U
Feb 19, 2020 Real Estate News
Prime Minister, Narendra Modi’s highly ambitious dream of ‘Housing for All by 2020’ has garnered much attention and praises from media and fellow countrymen since the project has been launched. The slow progress of the scheme is due to the fact that the government is leaving no stone unturned to make the dream reality.
Let us discuss it further:
Union Budget from 2018 to 2020 boosts PMAY-U
From 2018 to 2020, PMAY-U has been mentioned in the Budgets. In 2018, a separate fund for this segment was set up under the National Housing Bank (NHB). Affordable housing got the much-needed industry status, and the developers got the tax holiday which will help in keeping the liquidity in the sector. Standard deductions were also increased, which helped the homebuyers save a little extra making it easier to pay the EMIs.
In 2019, affordable properties got a better definition. The properties under/or Rs 45 lacs were termed as affordable properties with the size limitation of 60sqm in metros and 90sqm in Tier-II cities. Additional deduction of Rs 1.5 lacs on the interest on home loans were launched. The overall deduction stood at Rs 3.5 lacs while those who choose to pay the EMI for 15 years can save up to Rs 7 lacs.
The real estate developers found it difficult to sell their inventory as most of the units in the primary market are priced between Rs 45 lacs to Rs 75 lacs. They insisted on increasing the area of the affordable housing segment, which will help in attracting more buyers in both metro cities and non- metros. The government increased the area of affordable housing in metros from 90 sqm to 120 sqm and in non-metros from 60 sqm to 90 sqm.
In Budget 2020, the tax holiday of the developers was increased for another year and the tax deduction on the interest paid on the affordable housing loan from by Rs 1.5 lacs for the loans taken till March 31, 2021.
Completion status of PMAY-U units
As of January 2020, the government has sanctioned 1 crore affordable housing units from the requirement of 1.12 crore. Out of the sanctioned units, 30 lacs have been completed, and 57 lacs are under construction.
Major developments in PMAY-U
What PMAY-U holds for a middle-income group
The government has approved the expansion of the carpet area for the middle-income group under PMAY-U. The government has made modifications to the size of the dwelling units twice. From 90 sqm and 120 sqm (for MIG-I category), the size of the dwelling is now 160 sqm while for the MIG- II category, the size has increased from 110 sqm and 150 sqm to 200 sqm.
The government has approved the expansion of the carpet area for the middle-income group under PMAY-U. The government has made modifications to the size of the dwelling units twice. From 90 sqm and 120 sqm (for MIG-I category), the size of the dwelling is now 160 sqm while for the MIG- II category, the size has increased from 110 sqm and 150 sqm to 200 sqm.
PMAY home loan
The housing ministry has implemented the CLSS for the middle-income group. According to the financial and industry experts, the implementation of CLSS has been the major driving factor for the 20 percent growth in the registered home loans.
To reach out to more prospective beneficiaries, the government is taking steps in that direction. They may club your income tax data to see who is eligible for a PMAY-U. A certificate issued by the IT department will be enough o avail the loan from the bank to furnish the purchase of a unit.
Improvement needed in PMAY schemes
The lack of awareness about the PMAY scheme may be the reason for a slump in the sales of the affordable housing segment. The slowdown of the market can be another reason. Even though the RBI has been on a repo rate deduction spree since last year, the banks have failed to pass the benefit to the borrower. It is expected that this year the banks will catch up and provide the much-needed boost to the real estate segment.
Social auditing
The guidelines of the PMAY mention social auditing as an important factor. Based on the feedback of the beneficiaries and stakeholders, the audit helps to measure, understand and report to improve the performance of the mission. The government extends full help to the states that are participating in the social auditing. The states that have expressed interest in social auditing plans, half the funds have already been granted to them.
Let us discuss it further:
Union Budget from 2018 to 2020 boosts PMAY-U
From 2018 to 2020, PMAY-U has been mentioned in the Budgets. In 2018, a separate fund for this segment was set up under the National Housing Bank (NHB). Affordable housing got the much-needed industry status, and the developers got the tax holiday which will help in keeping the liquidity in the sector. Standard deductions were also increased, which helped the homebuyers save a little extra making it easier to pay the EMIs.
In 2019, affordable properties got a better definition. The properties under/or Rs 45 lacs were termed as affordable properties with the size limitation of 60sqm in metros and 90sqm in Tier-II cities. Additional deduction of Rs 1.5 lacs on the interest on home loans were launched. The overall deduction stood at Rs 3.5 lacs while those who choose to pay the EMI for 15 years can save up to Rs 7 lacs.
The real estate developers found it difficult to sell their inventory as most of the units in the primary market are priced between Rs 45 lacs to Rs 75 lacs. They insisted on increasing the area of the affordable housing segment, which will help in attracting more buyers in both metro cities and non- metros. The government increased the area of affordable housing in metros from 90 sqm to 120 sqm and in non-metros from 60 sqm to 90 sqm.
In Budget 2020, the tax holiday of the developers was increased for another year and the tax deduction on the interest paid on the affordable housing loan from by Rs 1.5 lacs for the loans taken till March 31, 2021.
Completion status of PMAY-U units
As of January 2020, the government has sanctioned 1 crore affordable housing units from the requirement of 1.12 crore. Out of the sanctioned units, 30 lacs have been completed, and 57 lacs are under construction.
Major developments in PMAY-U
- Dedicated housing portal: Recently the Secretary of Ministry of Housing and Urban Affairs launched the website ‘HousingForAll.com’ which aims at listing all the affordable housing projects which have received the completion certificate across the country available. The portal is set to run an affordable housing sale fest which will last for 45 days starting from February 14 2020.
- Stress fund: The government has set up an emergency stress fund of Rs 25,000 crore which will help in funding the projects that have been stuck due to fund liquidity.
- Relaxed ECB guidelines: The guidelines for external commercial borrowings will also be relaxed to help PMAY homebuyers. This will also help the developers who are looking for outside investors to fund the project.
- More PMAY units: The central government has asked the state governments to submit their proposal of PMAY units by March 2020.
- New technology: About 6,368 units under PMAY will be constructed using new technologies that will be suitable for geo-climatic conditions.
- Angikaar campaign: The campaign attempts to bring PMAY-U beneficiaries under the fold and extend the schemes such as Ujjwala and Ayushmaan Bharat campaign.
- Helping the natural disaster affected area: The scheme also offers to extend the support to the cities and places that are hit with natural calamities like flood and hurricane. Providing homes to the victims of such a disaster is under the scheme.
- PMAY app for beneficiaries: The government launched a PMAY app for the beneficiaries where they can upload the picture and video of the completed project. These pictures will be scrutinized and depending on the work, and the state government will be rewarded.
What PMAY-U holds for a middle-income group
The government has approved the expansion of the carpet area for the middle-income group under PMAY-U. The government has made modifications to the size of the dwelling units twice. From 90 sqm and 120 sqm (for MIG-I category), the size of the dwelling is now 160 sqm while for the MIG- II category, the size has increased from 110 sqm and 150 sqm to 200 sqm.
The government has approved the expansion of the carpet area for the middle-income group under PMAY-U. The government has made modifications to the size of the dwelling units twice. From 90 sqm and 120 sqm (for MIG-I category), the size of the dwelling is now 160 sqm while for the MIG- II category, the size has increased from 110 sqm and 150 sqm to 200 sqm.
| Category | Size (in sqm) | Annual Income (in lacs) | Loan amount (in lacs) | Subsidy (in %) |
| MIG- I | 160 | 6-12 | Up to 9 | 4 |
| MIG- II | 200 | 12-18 | Up to 12 | 3 |
PMAY home loan
The housing ministry has implemented the CLSS for the middle-income group. According to the financial and industry experts, the implementation of CLSS has been the major driving factor for the 20 percent growth in the registered home loans.
To reach out to more prospective beneficiaries, the government is taking steps in that direction. They may club your income tax data to see who is eligible for a PMAY-U. A certificate issued by the IT department will be enough o avail the loan from the bank to furnish the purchase of a unit.
Improvement needed in PMAY schemes
The lack of awareness about the PMAY scheme may be the reason for a slump in the sales of the affordable housing segment. The slowdown of the market can be another reason. Even though the RBI has been on a repo rate deduction spree since last year, the banks have failed to pass the benefit to the borrower. It is expected that this year the banks will catch up and provide the much-needed boost to the real estate segment.
Social auditing
The guidelines of the PMAY mention social auditing as an important factor. Based on the feedback of the beneficiaries and stakeholders, the audit helps to measure, understand and report to improve the performance of the mission. The government extends full help to the states that are participating in the social auditing. The states that have expressed interest in social auditing plans, half the funds have already been granted to them.
