Affordable housing is emerging as the best thing to have happened to the Indian home buyer in the last 2 decades. Depending on the location, amenities provided, and construction technologies used, these homes are affordable to a larger cross-section of the working class than what exists today.
Now, the Reserve Bank of India (RBI) has eased norms for availing a home loan on an affordable home. Typically, stamp duty, registration and documentation charges add up to another 15% of the property value. Now, RBI has allowed Banks to include these charges in the overall property value, while disbursing a loan, as long as the property value does not exceed Rs. 10 lakhs. RBI made this announcement in March 2015.
Last July, the RBI helped ease investment or bank lending in the affordable home sector. According to the RBI communiqué, home loans to individuals up to Rs 50 lakh (for houses of value up to Rs 65 lakh) in metros, and loans up to Rs 40 lakh (home value Rs 50 lakh) in Tier-2 or Tier-3 cities will be considered as affordable housing.
Thanks to this, banks can now float infrastructure bonds up to seven years. The money raised this way will not attract the typical requirements around CRR (cash reserve ratio) and SLR (statutory liquidity ratio). All this has a cascaded effect on increasing the availability of affordable homes.
Well, how does this affect you, if you are in a much higher affordability bracket? For one, you could buy one or more affordable homes as an investment option. Secondly, if you are a business owner, you could create policies that encourage your employees to buy an affordable home. This is a valuable perk that can go a long way in attracting and retaining talent.