CLSS Scheme - A Game Changer for Real Estate Market in India

To achieve its mission of ‘housing for all by 2022’, the Government of India has announced an increase in the square-feet scale of residential units under the Pradhan Mantri Awas Yojana scheme. The Government’s move on relaxing norms on carpet areas by 33% under the PMAY subsidy scheme is one of the primary reasons for the boom in the real estate market, especially in small cities. Also, there has been a rise in the sale of houses in tier II and tier III cities where the cost of land is comparatively low.

This step is an excellent move for India's housing market. It is enabling a larger population to buy a house of their own and avail the subsidy benefit. Moreover, this step is also a boost towards construction in the affordable housing sector.

A Glance through the Changes in the CLSS Scheme

Under the PMAY subsidy scheme, the area of a house eligible for interest subsidy under the Credit Linked Subsidy Scheme (CLSS) is different for each category i.e. Economically Weaker Section (EWS), Low Income Group (LIG) and Middle Income Group (MIG).

As per recent changes:

• The earlier carpet area of 120 sq. mt. has increased to 160 sq. mt. for MIG I beneficiaries (falling in the income range of Rs. 6 to 12 lakhs)

• The earlier carpet area of 150 sq. mt. has increased to 200 sq. mt. for MIG II beneficiaries (falling in the income range of Rs. 12 to 18 lakhs)

The revision of the carpet area of houses eligible for interest subsidy under the CLSS scheme has given a bolster to affordable housing.

The increase in the carpet area of houses for MIG category has enabled millions of people to reap the benefits of the CLSS scheme. The changes have significantly impacted the real estate sector in India which has, in turn, led to the positive impact on the economy as a whole.

Benefits to MIG Categories

For the MIG I category, the available housing loan amount is Rs. 9 lakhs and the eligibility for a maximum subsidy is Rs. 2.35 lakhs with an interest subsidy of 4% per annum.

For the MIG II category, the available housing loan amount is Rs. 12 lakhs and the eligibility for a maximum subsidy is Rs. 2.30 lakhs with an interest subsidy of 3% per annum.

Eligibility to apply for Pradhan Mantri Home Loan

However, before you venture out to benefit from this scheme, you must ensure you fulfil all the eligibility criteria to qualify for a housing loan under the PMAY subsidy scheme. Some eligibility conditions are as follows:

• You are eligible for the CLSS scheme if you are buying or constructing your first house.

• While applying for the scheme, your age must be 70 years or less.

• You or any of your family member should not have previously taken any benefit under the PMAY scheme.

• You or any of your family member should not have a solid structured (pucca) residential house in this country.

• The combined income of the household should be between 3 to 18 lakhs per annum.

The Bottom Line

The changes in the scheme have broadened homeownership opportunities for home buyers under the PMAY scheme. If you too are willing to take the benefit of the project, you must take a look at an affordable home loan from NBFCs.

Moreover, you get various pre-approved offers which help you save your time and ease the entire process of availing a home loan.

About This Author

Anamika Verma A financial Advisor Joined: December 18th, 2017