Budget 2018: Government to come up with a dedicated affordable housing fund

In the Union Budget 2018, the Government has announced a dedicated fund for affordable housing. Like last year, the key focus of the real estate sector budget in 2018 was the target for affordable housing by 2022. The government has also announced to increase the allocation of PMAY in the urban areas by 7.6%. While announcing the Union Budget 2018, finance minister Arun Jaitley stated that the government will establish a dedicated Affordable Housing Fund (AHF) in the National Housing Bank. He also announced that 51 lakhs houses are expected to be ready by 2017-2018 and 51 lakhs more to be constructed during 2018-2019 under the Prime Minister Awas Yojana (Rural). In the urban areas, 37 lakhs houses have been sanctioned. The creation of the Affordable Housing Fund will allow a better availability of capital for development, especially in the urban and semi-urban areas. The allocation of PMAY (urban) has been increased from INR 6,042 crores to INR 6,505 crores. In the urban areas, the subsidy requirement is higher as these areas have higher ticket sizes. This will further benefit the affordable housing in these areas.

According to real estate experts, the Budget 2017 had granted the infrastructure status to the scheme of affordable housing. The Budget in 2018 has announced to establish a dedicated fund for this purpose under the National Housing Bank (NHB). This will simplify the lending for the affordable housing project.

In January, the GST on the real estate sector was decreased to 8% from 12%. The budget has announced the development of 31 lakhs homes in 2018-2019 in the urban areas and 51 lakhs homes in the rural areas. Evidently, the government has proposed a Dedicated Affordable Housing Fund under NHB. This will eliminate the shortfalls in the fund in developing these projects.

Well, the ‘Housing for All Scheme’ of the government is one of the most promising developments in the industry. With the allocation of funds for these projects, the real estate sector in India is likely to get a boost. Besides, the reduction in GST prior to the announcement of the Union Budget is good news for the developers.