The government time and again has retained its focus on providing benefits to the middle-income group, which was evident from the relaxations that the government has offered to home buyers and developers in order to promote affordable housing. Finance Minister Nirmala Sitharaman, in her second budget, proposed to extend a tax holiday to developers constructing affordable housing projects.

"To boost the supply of affordable houses, the tax holiday is provided on profits earned by developers on affordable projects approved by 31 March 2020. I propose to extend the date of approvals on affordable projects for availing this benefit by one more year again," she said. To give further leg up to the affordable housing segment, the Union government has extended the benefit of availing an additional deduction of up to 1.50 lakh for interest paid on home loans if taken for buying affordable homes by an additional year till 31st March 2021.

To give further leg up to the affordable housing segment, the Union government has extended the benefit of availing an additional deduction of up to 1.50 lakh for interest paid on home loans if taken for buying affordable homes by an additional year till 31st March 2021.

For a house to come under the affordable segment, it should cost no more than 45 lakhs with an area of 90 sq meters in non-metro cities and 60 square meters in metro cities.

Experts believe that these measures taken for the affordable segment will drive demand for the segment in the industry.

As per a research report by ANAROCK, the supply of new launches across India has jumped by 21% in 2019 as compared to a year ago and most of this is contributed by the affordable housing segment. Affordable and mid-end segments together accounted for more than 70% of the total supply addition in 2019, thanks to multiple government sops throughout the year. Luxury and ultraluxury segments remained limited to end-user interest, with no serious investor activity, said the report.

Of the estimated 2.37 lakh new unit launches in 2019 in the top seven cities, nearly 40% or approximately 92,000 units were in the affordable segment, followed by mid-segment with a 33% share.

What is affordable housing

Affordable housing or low-cost housing initiative was taken by the government to make the dream of owning a house come true even for the low income and mid-income group. Low cost housing depends on factors such as income, size of the house/property and affordability. Developing nations are in need of such schemes by the government because of increased population and low per capita income of the citizens. These schemes also make way for people with low purchasing power to buy a home. Government forms a partnership with various developers for the development of such a residential unit.

PMAY under Government

The Pradhan Mantri Awas Yojana (PMAY) and affordable housing for the urban sector was approved by the Union Cabinet in June 2015. The scheme introduced by the Government of India aims to ensure "Housing for all by 2022'' and thereby aims to provide homes to 18 million households in urban India and nearly 30 million households in rural India. Under PMAY, there is a Credit Linked Subsidy Scheme on home loans for properties in urban market belonging to Economically Weaker Section (EWS), Low Income Group (LIG) and Middle Income Group 1 and 2 (MIG). The scheme can be availed for new or resale purchase of home, construction, or for extension or improvement of rooms.

The subsidy offered is dependent upon the loan amount and the income group one falls in. Applicants with income up to ₹6 Lacs, can avail a maximum subsidy of ₹2.67 Lacs, while applicants with income up to ₹12 Lacs, can avail a maximum subsidy of ₹2.35 Lacs and applicants with income up to ₹18 Lacs, can avail a maximum subsidy of ₹2.30 Lacs.

According to the latest news report, the Housing and Urban Affairs Ministry said that 32.07 lakh houses have been constructed and delivered so far under the Pradhan Mantri Awas Yojana-Urban (PMAY-U), out of the total sanctioned 1.03 crore houses.