Revival of CLSS Scheme: A Major Boost for Affordable Housing in Tier 1 and Tier 2 Cities

In a significant move to rejuvenate the affordable housing sector, Union Finance Minister Nirmala Sitharaman announced a substantial allocation of ?10 lakh crore under the PM Awas Yojana Urban 2.0 on July 23. This initiative aims to increase the supply of affordable housing in Tier 1 and Tier 2 cities, especially in areas newly connected with modern infrastructure.

Interest Subsidy Revival and Increased Allocation

A notable aspect of this announcement is the revival of the Credit Linked Subsidy Scheme (CLSS) with a dedicated outlay of ?4,000 crore. Real estate experts believe this move will enhance the affordability of homes for prospective buyers, particularly in the economically weaker section (EWS), lower income group (LIG), and middle-income group (MIG). The Union Budget for the financial year 2024-25 has allocated ?30,170 crore for PMAY-U, reflecting a 20.19% increase from the previous year.

Boosting Affordability and Housing Supply

The revival of the CLSS is expected to significantly impact the affordability of homes. According to the Union Housing and Urban Affairs Ministry, the interest subsidy will soon be available to EWS, LIG, and MIG families. The budgetary document outlines an allocation of ?3,000 crore for EWS and LIG groups to construct houses under CLSS in urban areas, while the MIG will receive ?1,000 crore. This central assistance of ?2.2 lakh crore over the next five years aims to meet the housing needs of one crore urban poor and middle-class families.

Strategic Location of Affordable Housing

The increased funding for affordable housing is anticipated to result in a surge of housing projects along new infrastructure corridors, such as highways, Regional Rapid Transit System (RRTS), and Metro lines. Improved road and metro connectivity in major cities has made peripheral locations more accessible, potentially transforming them into viable areas for affordable housing projects.

Proximity to Central Business Districts

Several new affordable housing projects may emerge within 45 minutes of Central Business Districts (CBDs) in major cities. This proximity is due to the relatively lower land prices in these zones, making them more suitable for constructing affordable housing. The government's decision to reinstate the interest subsidy under the Pradhan Mantri Awas Yojana (Urban) 2.0, combined with the ?4,000 crore allocation for CLSS, signifies a strong commitment to enhancing homeownership accessibility for many families.

Collaboration and Effective Implementation

The success of this scheme will rely heavily on the collaboration between central and state governments in promoting affordable housing. Developers are also expected to play a crucial role in ensuring the effective implementation of these projects. If permitted, Strategic utilization of agricultural lands along with newly developed infrastructure for residential purposes will be essential in providing quality and affordable homes to those who need them the most.

Conclusion

The 2024 budget’s emphasis on reviving the CLSS and boosting funding for affordable housing highlights a comprehensive approach to addressing the housing needs of economically weaker and middle-income groups. By focusing on areas with improved infrastructure connectivity, the government aims to create a more inclusive and accessible housing market. This initiative is poised to drive significant growth in the affordable housing sector, offering new opportunities for developers, investors, and homebuyers alike.