Government announces new measures to boost housing and facilitate home buyers External Commercial Borrowing guidel… https://t.co/g2c2MnzL6r — PIB India (@PIB_India) 1568455338000

Bringing good news for government employees building houses, the government has announced reduction in interest rate on house building advance and linking to 10 year government securities yields. This is expected to make such advances cheaper for government employees building houses and thereby boost demand for housing.This is part of a package of measures announced by the government to boost the housing sector. The balance of the measures are aimed at solving the financial problems facing the sector. The measures are aimed at solving the funds crunch in the sector and individual home buyers will only feel the secondary impact.Currently, according to RBI, 10 year government bond is trading at 6.64 per cent. This is around its lowest since 2017. The interest on housing building advance from the financial year 2017-18 will be 8.50%. This shall be reviewed and accordingly re-notified every three years in consultation with the finance ministry.House Building Advance (HBA) is available to central government and state government employees for constructing a new house on a plot owned by the employee or jointly with the spouse. The scheme can also be availed for the purchase of new house or flat.According to the Ministry of Housing and Urban Affairs' website, the advance can be taken towards the repayment of bank loan which is taken for the purpose of construction/purchase of new house/flat. However, there are certain conditions that must be fulfilled to migrate to this scheme.Purchase of plot or new house which will be allowed under the HBA scheme to applicants as follows:a) Who are purchasing flats from housing Boards, development authorities and other statutory or semi-Government bodies and from registered builders i.e., registered private builders, architects, house building societies, etc., but not from private individuals.b) Purchasing a plot and constructing a house thereon.c) Purchasing a plot under co-operative Schemes and constructing a house/ flat thereon or acquiring a house through membership of Cooperative Group Housing Societies.d) Purchase/construction of house under the self-financing schemes of Delhi, Bangalore, UP, Lucknow etc.Remember, only one advance shall be available to the government employee during his/her entire service. According to the housing ministry's website, the amount of advance that a government employee is eligible for shall be maximum of the following:(a) 34 months basic pay subject to a maximum of Rs 25 lakh only or cost of the house/flat, or the amount according to repaying capacity, whichever is the least for construction/purchase of new house/flat.(b) For expansion of existing house, the amount of HBA will be limited to 34 months basic pay subject to maximum of Rs 10 lakh only, or the cost of the expansion, or the amount according to repaying capacity, whichever is the least.(c ) The amount of the advance shall be restricted to 80% of true cost of the land and construction of house or cost of expansion of living accommodation in the case of construction in rural areas. This can be relaxed and 100% can be sanctioned if the head of the department certifies that the concerned rural area falls within the periphery of town or city.For the purpose of calculating the admissible loan amount, the repayment capacity of the central government employee shall be calculated as below:1) In cases of employee retiring after 20 years: 40% of basic pay.2) In cases of employee retiring after 10 years but not later than 20 years: Up to 40% of basic pay. 65% of death-cum-retirement (DCR) gratuity may also be adjusted.3) In cases of employee retiring within 10 years: Up to 50% of basic pay DCR Gratuity up to 75% can be adjusted.Another measure that is likely to benefit homebuyers, although a limited number, stuck due to non-completion of projects is setting up of Rs 10,000 crore special window. For homebuyers with houses in projects which are near completion but stuck because builders have run out of funds are likely to benefit from the special window announced. However, only those projects will benefit which meet these criteria:a) Non NPAb) Non NCLTc) Affordable housingd) Middle income categorye) Net worth positive