The affordable housing segment in India has gained significant momentum, primarily because of the series of policy and regulatory changes proposed in the last couple of years. The first significant boost to the affordable housing segment came in 2015 when the government of Indian announced the Pradhan Mantri Awas Yojana. This ambitious plan aims to provide Housing for all.
Under the PMAY initiative, the government aims to build about two crore affordable housing units and provide a pucca house to the beneficiaries from the economically weaker section and low-income groups. Also, under the plan, the government announced that it would offer subsidy on the home loan interest rate to encourage economically weaker section to become a homeowner.
One of the most important reasons why the government has been encouraging the affordable housing segment is to bridge the gap between the lack of housing units and the number of migrants coming to semi-urban and urban areas. Reports suggest that as of 2019, the affordable housing sector has a shortage of 10 million units in the urban areas.
Pradhan Mantri Awas Yojana – A way to boost affordable housing segment
To provide financial support to aspiring homebuyers, the government has directed the financial institutions in India to implement Pradhan Mantri Awas Yojana. Under the scheme, the lenders are directed to provide financial assistance to the eligible applicants across India. Typically, the scheme is classified based on the annual income and the size of the housing unit. The primary features of PMAY include:
- With PMAY, the government aims to increase the purchasing power of the families in India by providing them subsidy on the home loan interest rate and make borrowing affordable for them.
- The applicants will get the interest subsidy based on the income category they belong to.
- Applicants who own a pucca house in any part of the country are not eligible to apply for PMAY benefits
- The loan borrowed under PMAY can be used for renovating the existing kuccha house to a pucca house or purchase a new home.
Eligibility for PMAY
- The applicants should be an Indian citizen
- The applicant should be aged above 18 years, and the maximum age at the end of the loan tenure should not be more than 70 years
- The applicant or any of the family members of the applicant should not have availed any financial assistance under other government affordable housing schemes
- All applicants who have already availed t the benefits of PMAY are not eligible to apply again
- The home must be mandatorily registered under the name of the female member of the family.
Documents required to apply for a home loan under PMAY
- The PMAY application form (duly filled and signed)
- Proof of Identity – PAN card, Aadhaar card, Ration Card, driving license, Voter ID, an Identification card issued by any government organisation
- Proof of Residence – Aadhaar Card, Ration Card, Election card, driving license, passport
- Passport-sized photograph
- Income-related documents
- Property papers
So, with the growing demand for a home loan under PMAY, and the various government initiatives, the affordable housing segment is likely to grow in the future.