Revised Flat Size Norms a Major Demand Boost for Larger Homes in Tier 2/3 Cities
The housing ministry’s decision to tweak the eligibility criteria for MIG-I and MIG-II home buyers for houses eligible for interest benefit under PMAY is a phenomenal move to boost sales of large-sized apartments.
As per the revised norms, MIG-I category home buyers with household income between ₹ 6 lakh – ₹ 12 lakh are now eligible for a subsidy for homes up to carpet area of 160 sq. m. from the earlier 120 sq. m. Similarly, MIG-II category home buyers with household income between ₹ 12 lakh – ₹ 18 lakh are also eligible for a subsidy for homes with a carpet area of up to 200 sq. m. from the earlier it was 150 sq. m.
This change will have a significant impact on home sales in tier II and tier III cities where the land costs and therefore capital values of properties are low and larger apartments are within the reach of such buyers. The timing of this increase in carpet area eligibility norms is perfect, as the RBI recently decided to revise the housing loan limits for Priority Sector Lending (PSL). The eligibility under PSL has been revised from ₹ 20 lakh to ₹ 25 lakh in cities other than metros.
The central bank and the housing ministry are evidently working more cohesively than ever before, and it would not be an exaggeration to say that the Government seems laser-focused on achieving its ambitious mission of ‘Housing for All’ by 2022. That said, while increasing the carpet area eligibility is surely an impactful move, the Government should also consider revisions to the interest subsidies so that home buyers get better financial benefits.