With the real estate sector going through difficult times, expectations run high on the Budget doling out more sops to revive the sector, particularly for Pradhan Mantri Awas Yojna (PMAY), the affordable housing scheme. One of the key schemes through which the Centre has been trying to push demand for affordable housing is the credit-linked subsidy scheme (CLSS) which offers an interest subvention on low-ticket housing loans.
The CLSS is the only scheme under the PMAY (Urban) which is directly implemented by the Centre. Through this scheme, the Centre provides direct subsidy on home loans taken by urban buyers of affordable homes, with incomes below specific thresholds. The benefits are targeted at individuals from economically weaker sections (EWS), the lower-income group (LIG) and the middle-income group (MIG).
Under this scheme, individuals purchasing a new affordable home can get interest concessions of 3-4 per cent on the amount borrowed, subject to some conditions. The subsidy is calculated as the present value of interest savings on home loans over the entire tenure of the loan, capped at a maximum of ₹2.35 lakh. This subsidy is deducted from the principal dues of the borrower, reducing the amount of EMIs payable. For getting the subsidy, the borrower has to submit a self-declaration on the income and title of the property to be acquired, to the lender who verifies these details.
With the affordable housing segment gaining traction both from developers and home buyers, and the CLSS helping the process, the gap between home buyer aspirations and what’s available in the market could narrow.