Purchase of affordable houses through resale could be impacted as interest subsidy under the new Pradhan Mantri Awas Yojana – Urban 2.0 (PMAY-U 2.0) will be provided only once for a property. Concomitantly, sale could be hit as buyers will not want to buy a property on which interest subsidy has already been availed.
According to PMAY-U 2.0, which is a flagship mission of the Indian government implemented by the Ministry of Housing and Urban Affairs (MoHUA), subsidy under the interest subsidy scheme ( ISS) will be provided only once for a property. If it is sold to someone else, the purchaser can’t benefit from ISS on this property. “PLIs (primary lending institutions) are to ensure that subsidy benefit is not taken by the previous owner by checking on the unified web portal, before initiating the claim of the current occupant,” per the ISS. PLIs include banks and housing finance companies.
A hassle
Housing finance experts say the clause “subsidy under the scheme will be provided only once for a property” is a big irritant and needs to be suitably amended so that resale market for affordable houses is not affected. They emphasised that the property-linkage clause to avail subsidy was not there in the earlier scheme.
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Households belonging to economically weaker sections/low income groups and middle income groups segments in urban areas with an annual income of up to ₹3 lakh, ₹3-6 lakh and ₹6-9 lakh, respectively, are eligible to avail the benefit of ISS.
A maximum release of interest subsidy of ₹1.80 lakh (reduced from ₹2.67 lakh under the earlier scheme) will be provided to eligible beneficiaries having a loan tenure of more than five years. The subsidy for eligible home loan beneficiaries will be spread over five yearly instalments, lowering the incentive for borrowers to switch lenders early in the loan term.
In case a borrower has taken a housing loan from one PLI and later on switches to another PLI for balance transfer, such beneficiary will not be eligible to claim the benefit of interest subsidy again. If a person has not claimed interest subsidy from first PLI, he/she will not be eligible after balance transfer.