Govt to launch affordable rental housing scheme: FM Sitharaman

May 14, 2020: Finance Minister Nirmala Sitharaman on Thursday announced a Rs 70,000 crore boost to the housing and construction sectors that have been affected by the coronavirus outbreak and lockdown, by extending interest subsidy scheme, CLSS, meant to help middle class families build or purchase a house.

Unveiling the second tranche of Prime Minister’s Rs 20 lakh crore stimulus package for the coronavirus-hit economy, Sitharaman said the credit-linked subsidy scheme for middle-income groups would be extended by 12 months to March 2021. The scheme started in May 2017 has expired on March 31. Announcing the scheme, the FM said, this would provide a boost to the housing and construction sectors by stimulating demand for steel, cement, transportation, and other construction-related materials and activities.

The real estate sector applauded these measures –

Dr Niranjan Hiranandani – President – NAREDCO
The extension of CLSS should see demand for another 2.5 lakh affordable homes, which should create demand for construction material as it also provides jobs. The rental housing scheme under PMAY offers a business opportunity to the private sector, to build more rental housing stock through the PPP mode, with a concessionaire arrangement. The Finance Minister focused on moves that will improve working conditions, making life easier and more conducive for workers. Most of these were largely through changes in codes, rules and regulations; rather than direct liquidity, monetary or fiscal help.

The Credit Linked Subsidy Scheme (CLSS) which has benefited 3.3 lakh families till now, has been extended up to March, 2021and wherein other category of LIG/ EWS however continues to get extension upto March 2022. Estimated to benefit another 2.5 lakh families, it aims at providing benefits that will enable housing for the lowest strata of middle-income groups (MIG I and MIG II category income of up to 6-18 lakh/annum). Considering that majority of the home buyers fall into this category of MIG I with income from Rs 6 lakhs to Rs 12 lacs continues to get an interest subsidy of 4 percent and MIG II category with income slab of Rs 12 to Rs 18 lacs gets interest subvention of 3 percent. Thus interest subvention support extended will spur up the potential demand of housing units resulting in to cumulative demand for construction services, building materials, finally translating into the job creation.

The Finance Minister mentioned a scheme that seeks to provide affordable rental housing for urban poor. The Indian Government will launch, under Prime Minister Awaas Yojana (PMAY) a rental housing scheme which aims to provide affordable rental homes to urban poor and migrant labor in urban areas. The scheme includes incentivizing manufacturing units/ factories to build such rental homes on their private land/ within their compounds. The scheme includes usage of empty government land to build more rental housing stock through the PPP mode, with a concessionaire arrangement similar to toll being charged by organizations building highways. The other aspect is about converting government-funded housing in major cities to affordable rental housing.

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Positive moves, from the migrant labor as also urban poor perspective; some business opportunities under PPP mode as also enhanced demand for construction material with the 2.5 lakh homes under CLSS, but real estate as an industry, awaits its turn to get stimulus package measures that will create a positive impact.

Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani
Government’s efforts to trigger pace and activity in the sector through a Rs 70000 crore stimulus package is commendable. Extension of the Credit Linked Subsidy Scheme will encourage more demand and aid in clearing unsold inventory. The announcement to build rental housing complexes via public-private partnership will stimulate demand for raw materials, generate employment and thus provide a thrust to affordable housing . Overall today’s announcement will certainly alleviate stress to a certain extent from the sector. The sector is hopeful for a liquidity push which has been a prime concern for the sector.

Anshuman Magazine, Chairman & CEO – India, South East Asia, Middle East & Africa, CBRE

Following the announcement made by Hon’ble Finance Minister Nirmala Sitharaman, the industry welcomes the measures announced today by the Government. The announcement on rural infrastructure and affordable rental accommodations for urban and migrant workers under PPP partnership will open newer avenues for the construction industry. For middle-income group, the extension of Credit Linked Subsidy Scheme (CLSS) upto March 2021, is a positive step and will further strengthen demand in the affordable housing segment.”

Anuj Puri, Chairman – ANAROCK Property Consultants
The second tranche of the government’s INR 20 lakh crore economic package was unleashed for the benefit of migrant workers, traders, farmers and street vendors – and there was a real estate takeaway. In a big move, the government has announced the one-year extension of the CLSS scheme up to March 2021. This will help push demand for affordable housing. Ever since its implementation in 2017, the CLSS scheme has already benefitted over 3.3 lakh families and the extension will further aid many more families to avail housing under this scheme. As a ripple effect of increased demand for affordable housing, it will positively push demand for raw materials like cement, steel, transport and other construction materials. The government’s push for affordable housing has been unmistakable in the last six years. Its Housing for All by 2022 project has already resulted in multiple sops and incentives. As a consequence, there has been a significant increase in activity in the affordable segment over the last few years. As per ANAROCK research, there are currently 15.62 lakh under-construction units across the top 7 cities, of which nearly 39% are in the affordable segment priced <INR 40 lakh budget.

Ravindra Sudhalkar, CEO, Reliance Home Finance
The Ministry’s announcement to build rental housing complexes via public-private partnership will go a long way in resolving housing issues for migrant workers and Urban Poor who currently live in pitiable conditions. The concessions promised to manufacture units and industries to take up such projects and also allowing them to follow the BOT model similar to road projects, for constructing these rented dwellings will encourage many new players to enter the affordable housing segment.

Dr D K Aggarwal, President, PHD Chamber
Extension of the credit-linked subsidy scheme (CLSS) scheme till March 2021 and Rs 70,000 crore boost to housing sector will stimulate demand for housing, steel, cement, transport and other construction-related materials, said Dr Aggarwal.

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