Low-cost housing for 7 cr families under new scheme

New Delhi, August 11, 2014 – The Government aims to support construction of houses for seven crore families under the Mission of Low-Cost Affordable Housing. It also expects interest rates for real estate developers to come down as inflation is moderating.

Responding to a question on affordable housing in the Lok Sabha on Friday, Finance Minister Arun Jaitley said out of seven crore families, 31 per cent will be in urban areas and the remaining in rural areas. He said there are plans to ensure availability of loans from various sources to support construction of houses in both urban and rural areas.

In this year’s Budget, Jaitley had proposed that the Mission be anchored by the National Housing Bank for which incentive schemes will be evolved. He also allocated Rs.4,000 crore for the NHB to allow flow of cheaper credit for affordable housing to the urban poor, those in the economically weaker sections and the low income group. The NHB refinances housing finance companies.

Securing finance

When one member asked about tax benefits and cheaper finance for the housing sector, Jaitley said proposals such as tax benefit for principal repayment up to Rs.1.5 lakh (raised from Rs.1 lakh) and interest payment up to Rs.2 lakh (raised from Rs.1.5 lakh) has been made in the Budget. Now, finance at lower interest rates for real estate developers depends upon the base rate of banks and financial institutions.

Since inflation is high, the Reserve Bank has kept the repo rate (rate on which banks determines normal interest rate) high. “But if inflation is controlled, for which we see some possibility, naturally the interest rate is expected to come down in coming days,” he said. Business Line