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PMAY: Carpet area hike to push home sales in smaller cities

Thursday, June 14, 2018

The government's move to hike the carpet area of homes eligible for interest subsidy under the Pradhan Mantri Awas Yojna (PMAY) for the middle-income group (MIG) will give a much needed push to home sales, especially in tier II and III cities, say experts.

The ministry of housing and urban affairs yesterday increased the carpet area of houses eligible for benefits under PMAY's credit linked subsidy scheme (CLSS) to 160 square meter (sqmt) for MIG-I and 200 sqmt for MIG-II, effective January 1, 2017.

The carpet areas were earlier fixed at 120 sqmt for MIG-I and 150 sq meter for MIG-II. "This move will have a significant impact on home sales in tier II and III cities where the land costs and therefore, capital values of properties are low and larger apartments are within the reach of such buyers," said Anuj Puri, chairman, Anarock Property Consultants.

Niranjan Hiranandani, national president of builders' body Naredco, said the positive impact will be felt in peripheral areas of metro cities, along with smaller cities. "The impact will be in form of enhanced economic activity and will result in improved demand, which in turn will give a boost to construction activity," he said.

People with annual income from Rs 6 lakh to Rs 12 lakh would qualify for MIG I, while with income above Rs 12 lakh and up to Rs 18 lakh will come under MIG II. Interest subsidy for MIG I and II will be 4 % and 3 %, respectively, for a maximum tenure of 20 years.

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