Change in carpet area rule may spur housing demand in Karnataka

The Centre’s recent move to increase the carpet area for residences eligible for interest subsidy under the Credit Linked Subsidy Scheme (CLSS) has come as a boon for the affordable housing sector in Karnataka. This will apply to the Middle Income Group (MIG) under the Pradhan Mantri Awas Yojana (urban) that aims to provide houses to all by 2022.

Under the MIG-I category, the carpet area of houses has been raised from 968 sq ft to 1,300 sq ft. Under the MIG-II segment, it has been increased from 1200 sq ft to 1615 sq ft.

Adarsh Narahari, secretary, Credai, Bengaluru, said: “The move will provide impetus for both home buyers and developers. Under the MIG-I category, beneficiaries whose annual income is between Rs 6 lakh and Rs12 lakh can avail a four per cent interest subsidy on a loan of up to Rs 9 lakh. For the MIG-II category, beneficiaries with an annual income of Rs 12 lakh to Rs 18 lakh get an interest subsidy of three per cent on a loan of up to Rs12 lakh. Since the benefit is provided upfront, the down payment reduces. Therefore, more customers will be eligible to buy homes.”

Endorsing his view, Kapil Mohan, principal secretary, housing department, said: “The move will help middle income buyers. It will also help the sector clear unsold homes. The increase in carpet area may not be of much benefit in Bengaluru considering the high prices of land. But it is expected to be a boon for affordable housing on the outskirts of Bengaluru and tier-II cities.”

Developers believe the move is a step in the right direction and will boost sales. Viswa Prathap Desu, senior vice president, sales and marketing, Brigade Enterprises, said: “We are optimistic that there will be an increase in the number of customers who want to reap the benefits of this scheme. It will help developers clear stock and speed up new launches.”

Ashish R Puravankara, managing director, Puravankara believes it will “have a positive impact on both premium and affordable housing segments”, while Kishore Jain, managing director, Jain Heights Structures, said: “The new rule will cover many ongoing projects under PMAY and stretch the market size. Such incentives will boost the real estate sector and will result in new projects and employment generation as well.”

Source: ET Realty

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