Affordable Housing Schemes


Date: 8-January,2019Last Updated: 28-June,2021
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Though 'Affordable Housing in India' has been a term which is quite frequented by the populace now and again, it has seldom been used in its right sense. Most people associate the literal meaning to the actual usage formulated by the government and the financial experts. Thus the term Affordable Housing has a different meaning when used by the two sectors.

What is Affordable Housing?

The term refers to the low-cost shelters or housing units that are affordable by the low-income groups of the society whose income falls below the average household income. These units are usually developed by Governmental agencies that are funded under government-sponsored schemes.

However, the term when used by private developers means that the cost of their units falls under the current market prices.

To know more about the affordable range of apartments and other housing projects, Check out the Best Affordable Housing Projects in Bangalore 2020

Types of affordable housing schemes set by both the government as well as the private sector :

  • Governmental Sector

As the population of India continues to thrive against the odds, the lack of shelters for the section below the nominal classes is a serious issue that will drastically affect the entire economic environment of the nation.

Governmental Schemes are often incorporated by the state housing boards of the individual states and metros like DDA, MHADA, and BDA Housing schemes.

The World Bank through its Low Income Housing Finance (LIHF) project which was implemented across 17 states in India catered over 15,000 of the poor settled in Urban areas.

Types of Affordable Housing Schemes in India

1. Pradhan Mantri Awas Yojana

The Pradhan Mantri Awas Yojana is a flagship housing and rehabilitation scheme from the Government of India. In 2015 Prime Minister Narendra Modi launched the Pradhan Mantri Awas Yojana proclaiming housing for all by 2022, in which roughly 20 million houses will be constructed for the homeless. The scheme is further divided into two components depending on urban and rural regions of the country.

2. Pradhan Mantri Awas Yojana Urban (PMAY U)

This scheme mainly caters to the urban areas of the country. It caters to bring affordable housing in India especially for the poor who has settled in Metro cities as well as the slum-dwellers. The female head of the family must be the owner or the co-owner of the pucca houses built under the project. There are 4 base options to choose from this scheme-

  • "In Situ" Slum Redevelopment - Central Assistance of 1 lakh per house for eligible slum dwellers along with land acquisition from private partners.
  • Credit Linked Subsidy Scheme- Assistance up to 2.67 lakh and interest subsidies of 6.5 %, 4% and 3% for amounts of Rs 6, 9 or 12 Lakhs for economically weaker sections(EWS), Low Income Groups(LIG), Middle Income Groups ( MIG) I & (MIG) II.
  • Affordable Housing in Partnership- up to 1.5 Lakh per EWS house in the projects where at least 35% of the houses are reserved for the EWS category and the project has at least 250 houses.
  • Beneficiary-led individual house construction/enhancements (BLC)- EWS can have assistance up to 1.5 lakhs to develop a new house or enhance the existing one if they had not availed any other benefits under the scheme.

3. Pradhan Mantri Awas Yojana Rural (PMAY-R)

Pradhan Mantri Awas Yojana Rural is devoted to the rural regions in the country except for Delhi and Chandigarh. Central Assistance up to 1.2 lakhs in plain areas and 1.3 lakhs for hilly areas. House sizes as of now are to be increased from 20 sqm to 25 sqm and every house will have a toilet. The beneficiary will get 90 days of unskilled labour from MGNREGA.

How to get affordable housing schemes in India through Pradhan Mantri Awas Yojana ?

The eligibility criteria to avail PMAY is as follows-

  • The beneficiary should be a family comprising of parents (husband & wife) and unmarried children.
  • They should not own a pucca house, however, beneficiaries who possess a house under 21 sqm are also considered.
  • An adult earning member irrespective of marital status are also eligible
  • EWS category of beneficiaries is eligible for Assistance in all four verticals of the
  • Missions whereas LIG/MIG category is eligible under only CLSS component of the Mission

The sections who can avail Pradhan Mantri Awas Yojana are as follows -

1. EWS (Economically Weaker Section) - Families whose annual income is lesser than Rupees 3 lakh.
2. LIG ( Low Income Group) - Families whose annual income is between Rupees 3 and 6 Lakhs.
3. MIG - (Middle Income Group)-
a) MIG I -Families whose annual income falls between Rupees 6 and 12 Lakhs.
b) MIG II- Families whose annual income falls between Rupees 12 and 18 Lakhs.
4. Scheduled Castes, Tribes and Other Backward Classes (OBCs).

  • Private Sector

The private realtors and developers are also attracted to the league of building affordable homes. Apart from social responsibility, they too have realized that only by addressing the housing needs of the middle class and lower-income classes can the real estate industry thrive.

Affordable houses or apartments are usually compact compared to the mainstream projects and won't feature the same kind of amenities the later offers. The private sector usually caters to the same in Indian cities rather than the suburbs or the rural areas. But South and East Bangalore have witnessed a rise in the field of affordable housing because of the cheaper land prices and availability of plots for development.

The private sector developers are allowed to build affordable homes for the MIG and the LIG classes at reasonable rates. Along with easier housing finance options and the Pradhan Mantri Awas Yojana in place, this proves to lighten the load for the median income groups. As for the developers, this is a huge boost to the real estate sector.

Also, the Developers of Affordable Housing have access to cheaper sources of funding including external commercial borrowings (ECB’s). Developers will also get an extension of a year to pay tax on notional rental income on completed but unsold units. The tenure for long-term capital gains for affordable housing schemes has been revised from 3 to 2 years. However, the deadline for project completion is increased to 5 years from the current 3 years.

The above mentioned are the types of affordable housing schemes in India which are undertaken by both the public and private sector. Affordable Housing is one of the major factors that will influence the real estate sector as it affects both the private and public sectors. The current trends sound comforting to a large part of our citizens who are homeless, however, "red tape" often enters the scene as the villain. The government should also ensure that the beneficiaries are benefited from this endeavor and affordable housing in India should no longer be a distant dream.

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