CLS Scheme for Middle Income Group – A New Dawn for the Real Estate Sector

When Narendra Modi government announced Pradhan Mantri Awas Yojana- Housing for All, it proved to be the major decision by addressing the shortage of 20 million slum and non-slum urban poor households, by 2022. There were schemes announced, and among all Credit Linked Subsidy Scheme (CLSS) Middle Income Group (MIG) was implemented and came into effect from January 1, 2017.

PM Narendra Modi in June 2014 said, “By the time the Nation Completes 75 years of its Independence, every family will have a pucca house with water connection, toilet facilities, 24*7 electricity supple and access”. Under this scheme, interest subsidy of 4 per cent on housing loans on housing loans up to Rs 9 lakh for those who have the income of Rs 12 lakh per year and 3 per cent on housing loans up to Rs 12 lakh for those having incomes of Rs 18 lakh per year will be offered.

This will mean assistance in the range of Rs 1.98 lakh to Rs 2.30 lakh per beneficiary. Only those who do not own a pucca house will be eligible. Besides, the two category of subsidy can be availed for building a house measuring 968 sq ft and 1184 sq ft respectively.

When “Housing for All” was announced in 2015, it was limited to EWS and LIG households. But the CLSS facility is further extended to MIG Households.

 

Guidelines of CLSS-MIG:

Recently, Ministry of Housing and Urban Poverty Alleviation (MHUPA) released guidelines for the revised section of CLSS-MIG. Some of the key highlights of the guidelines are:

The Beneficiaries:

The scheme will benefit to the family of husband, wife, unmarried sons/daughters. Also adult earning member will be treated as separate households. Similarly, in the case of a married couple, ownership will be eligible for single houses.

  • If the beneficiary owns another house, then he/she won’t be eligible for the scheme.
  • The income criteria for the beneficiary is divided into two categories:
  • Class MIG I: Households having the income between Rs 6,00,00 to Rs 12,00,000 annually
  • CLSS MIG II: Households defined having annual income between Rs 12, 00,000 to Rs 18, 00,000.
  • 70 lending institutions, including 45 Housing Finance Companies and 15 scheduled banks have signed MOU with National Housing Bank.
  • CLSS for the middle-income group is provisioned a sum of Rs 1000 crore for 2017-18.

 

How a Beneficiary would Benefit with CLSS?

To understand the benefit CLSS, let us check out this example: Say a homebuyer borrows Rs 100 from HFC against the subsidy of Rs 10 is allowed under the scheme. So by this, the borrower will have to pay back Rs90 towards the principal.

However, to get the benefit with this scheme, the beneficiary has to link the Aadhaar no to the financial institution to avoid any kind of duplication. Under this scheme, all statutory towns as per Census 2011 and town notified will fall under this scheme. This subsidy scheme is designed to help government reaching the target of “Housing for All” by 2022 for lower and middle income group. Moreover, this will help in overcoming the house shortage problem which currently the country is facing.

 

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