Subsidy eligibility: Increase in carpet area to boost sales in smaller towns, says Vinay Sah, LIC Housing Finance
How does this increase in carpet area impact life for you?
This is a welcome step and it will be very handy as far as non-urban or smaller town area centres are concerned. It will have some impact in metros, but major advantage would go to smaller centres where houses up to 200 square metres under MIG-II will be eligible for subsidy.
What is the market size, especially in tier-2 cities?
It will be immense. I cannot give you a number but last year we sold a total of around 21,000 units under all the categories of MIG-I, MIG-II, EWS and LIG and out of them, approximately 14,000-15,000 were MIG-I and MIG-II. So, the market is big. Till now, the problem was at smaller centres people were getting bigger houses but they were not able to avail of the subsidy. Earlier, the limit was 150 square meters. The market is huge, especially at smaller centres rather than main metros.
Do you also think that this move may not only increase the number of beneficiaries but would also give a much desired push to the already beleaguered sector and give a leg-up to construction activity as well?
The inventory for this sector is already there. This move would, in fact, take into consideration more beneficiaries coming in to avail of the subsidy. As subsidy is available to first-time homebuyers, this step will go on to increase the number of beneficiaries a great deal.
It is saying that beneficiaries can avail subsidy of up to Rs 2.35 lakh under the credit linked subsidy scheme?
Yes, the amount of subsidy being given remains the same, but more people can buy bigger houses now. That is the key point here. In smaller centres these units would be available for up to Rs 25-35 lakh. Earlier, these were not eligible for the subsidy. The amount eligible for subsidy has not been changed, it remains at Rs 9 lakh for MIG-I and Rs 12 lakh for MIG-II.
What you are saying is what may come by in terms of a compromise on pricing, making pricing of loans attractive and that will get compensated with an increase in demand for loans, especially the low-ticket housing schemes?
No, the normal ticket size for my company was about Rs 22 lakh last year. Now even for those loans, the first-time homebuyer will be eligible for subsidy.