Union Budget 2011: 1% rate subsidy welcome, but where are cheap houses

AHMEDABAD: The finance minister has provided a 1% interest subsidy on housing loans up to Rs 15 lakh and increased priority housing loan limit to Rs 25 lakh from the existing Rs 20 lakh. The move aims at promoting low-cost and affordable housing in the country.

Realty sector however feels that there are few offering in the affordable housing category. There are very few realty projects that offer houses costing Rs 15-20 lakh. The numbers are fewer in cities like Mumbai, Delhi, Bangalore, Chennai, Hyderabad, they feel.

"The rebate of 1% being offered for loans under Rs 15 lakh is a good move. However, there is a problem finding the product for which these incentives would be applicable," says Nirav Kothari, local director, Jones Lang LaSalle (JLL), a global property consultant.

"At present, there are few low-cost housing projects in the country. Most of the developers are into high-end and luxury products, so there will be a problem finding the right product," Kothari said while talking about the paucity of the low-cost houses in the market.

He however felt that the move to increase the prority housing loan limit to Rs 25 lakh was a positive one that will help to widen the base of home loan takers.

The government also increased the rural housing fund to Rs 3,000 crore from Rs 2,000 crore, a move realty experts feel will open up real estate development in far-flung areas. The experts however, are unsure how and where this fund will be spend.