The new Pradhan Mantri Awas Yojana-Urban 2.0 (PMAY-U 2.0) has introduced a significant change in the interest subsidy structure for affordable housing, limiting the subsidy to a single claim per property. This restriction could deter potential buyers from purchasing homes that have already availed of the subsidy, leading to a decline in resale activity. Primary lending institutions (PLIs) are mandated to ensure that previous owners do not benefit from the subsidy, creating additional challenges in the resale market.
The purchase of affordable houses through resale could be affected as the interest subsidy under the new Pradhan Mantri Awas Yojana-Urban 2.0 (PMAY-U 2.0) will be granted only once for a property. Consequently, sales may decline since buyers may hesitate to purchase a property that has already benefited from an interest subsidy. As per PMAY-U 2.0, the subsidy under the Interest Subsidy Scheme (ISS) will be available only once for each property. If a property is sold to another buyer, that purchaser will not be able to take advantage of the ISS for that property.
Primary lending institutions (PLIs) are required to ensure that the previous owner does not benefit from the subsidy by verifying the information on the unified web portal before processing the claim of the current occupant, according to the ISS. Housing finance experts have pointed out that the stipulation stating that the "subsidy under the scheme will be provided only once for a property" is a significant concern and should be revised to prevent negative impacts on the resale market for affordable housing. They stressed that the property-linkage clause for availing of the subsidy was absent in the earlier scheme.
Eligible beneficiaries will receive a maximum interest subsidy of INR 1.8 lakh, a reduction from INR 2.67 lakh under the previous scheme, provided they have a loan tenure exceeding five years. The subsidy for qualifying home loan beneficiaries will be distributed over five annual installments, which diminishes the incentive for borrowers to switch lenders early in their loan term. If a borrower has obtained a housing loan from one PLI and subsequently transfers to another PLI for balance transfer, that beneficiary will not be eligible to claim the interest subsidy again. Additionally, if a person has not claimed the interest subsidy from the first PLI, they will not be eligible for it following a balance transfer.
As the PMAY-U 2.0 continues to evolve, it is crucial for policymakers to reconsider the single-claim subsidy rule to maintain a healthy resale market for affordable housing. By addressing these concerns, the government can enhance the attractiveness of the scheme, ensuring it serves its intended purpose of promoting affordable housing accessibility.
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