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Central Government extends low-cost home subsidy to units built on private land
The Centre on Thursday announced a new PPP policy to boost private investment in affordable housing that allows extending Central funds of up to Rs 2.50 lakh for each house to be built by private builders even on private land.
The policy, which also aims to open up immense potential for private investments in affordable housing projects on government land parcels in urban areas, gives eight public private partnership (PPP) options for developers to invest in the segment, said the newly-appointed Union Urban Development and Housing Minister Hardeep Singh Puri.
“This policy seeks to assign risks among government, developers and financial institutions… besides leveraging underutilised and un-utilised private and public land parcels to meeting the Housing for All target by 2022,” Puri told an industry summit organised by real estate lobby Nardeco in Mumbai. As per the new policy, the two PPP models for private investments in affordable housing on private landbanks include extending Central assistance of about Rs 2.50 lakh per unit as interest subsidy on bank loans as upfront payment under Credit Linked Subsidy Component of PM’s Awas Yojana in urban areas. Under the second option, he said, Central assistance of Rs 1.50 lakh per each house built on private land would be provided, in case the beneficiaries do not take bank loans.
“The eight PPP options, including six for promoting affordable housing with private investments using government land have been evolved after extensive consultations with the states, promoter bodies and other stakeholders,” Puri said.
The other models include developing houses on design build and transfer model on government land, cross-subsidising this segment from revenues from high-end houses or commercial development, and annuity-based subsidised housing where builders will invest against deferred annuity payments by the government. The minister also said developers can opt for annuity-cum-capital grant-based model where builders can be given a share of the project cost as upfront payment or choose cost recovery by builders through rental incomes from houses built on government land.