Home Loan Subsidy to Boost Affordable Housing Demand

New Delhi, Jan 21 (PTI) Homebuyers' body FPCE has demanded that the government in the upcoming Budget provide interest subsidy on home loans to people purchasing affordable and mid-income housing.

In a statement on Wednesday, Forum For People's Collective Efforts (FPCE) President Abhay Upadhyay said the government should focus on promoting affordable and mid-segment housing.

"The real estate sector has increasingly gravitated towards luxury housing, resulting in a widening gap for the middle class and first-time homebuyers," he observed.

To address this issue, the FPCE has demanded that the government introduce a "subsidised interest scheme on home loans" for allottees purchasing units in affordable or mid-segment housing projects.

The subsidy should be provided only if the allottee services EMIs on time and there is no default on the part of the promoter.


To ensure transparency and prevent misuse, the government should issue clear and uniform guidelines defining "affordable" and "mid-segment" housing, the association said.

These guidelines should encourage development in semi-urban areas to decongest major cities and towns. The rules should prescribe maximum permissible rates per square foot of carpet area.

"The proposed incentive mechanism must be buyer-centric rather than promoter-centric. Instead of extending benefits directly to developers, the subsidy should flow to homebuyers, who bear the long-term financial burden of housing through home loans and interest payments," Upadhyay said.

The association argued that such an incentive would stimulate genuine housing demand and compel promoters to launch projects catering to the majority.

The FPCE also demanded reduction of tax burden on Resident Welfare Associations (RWAs).