PMAY-U: Affordable rental housing scheme gets cabinet nod

The Ministry of Housing and Urban Affairs has confirmed that the Affordable Rental Housing scheme has received the nod from the union cabinet

Amid the Coronavirus pandemic, the union cabinet has approved the Affordable Rental Housing Complexes scheme that was proposed earlier this year. Previously, in a bid to help prospective home buyers interested in the Pradhan Mantri Awas Yojana-Urban (PMAY-Urban) scheme, the government had extended the last date for the Credit-Linked Subsidy Scheme (CLSS) for the Middle-Income Groups I & II.


Affordable rental housing scheme

In May 2020, it was proposed that an Affordable Rental Housing Complexes (ARHCs) scheme, would be launched through the public-private partnership (PPP) model. The scheme would be targeted towards migrant workers, students and the urban poor, providing them with adequate living conditions and security through government-funded housing. The scheme would be under the PPP mode and industries, manufacturing units and institutions would be incentivised, to develop ARHCs on their unutilised land. Such properties, it was hoped, would deter migrant workers from undertaking long voyages to their native places, when faced with a calamity or a pandemic such as COVID-19. The ministry has now crystallised guidelines to this effect.

Taking to Twitter, Durga Shankar Mishra, secretary, Ministry of Housing and Urban Affairs (MoHUA), confirmed that the ARHCs scheme had been approved by the union cabinet on July 8, 2020. For this purpose, vacant government-funded housing complexes will be put to use and converted into ARHCs, after a concession agreement for 25 years is signed. The MoHUA claims it is a step towards an Atmanirbhar Bharat. The Ministry hopes to curtail the proliferation of slum dwellings and provide a decent environment for living close to workplaces, for those who cannot afford it by themselves.



Where will ARHCs be implemented?

ARHCs is a sub-scheme under the PMAY and the MoHUA has confirmed that it will be implemented in the following areas:

  • Statutory towns
  • Planning areas that are notified
  • Development authorities
  • Special area development authorities
  • Any other area that may be notified by the state or UT government


Implementation model of ARHCs

There are two models. First, government-funded land that is vacant can be converted to ARHCs, either by public agencies or on a PPP model. The second model is that in which the construction, operation, as well as the maintenance of ARHCs, will be by the public or private entity, on their own vacant land.

Implementation model of ARHC


List of beneficiaries under ARHCs

ARHCs are meant for urban migrants from the EWS and LIG sections and the following will be beneficiaries:

  1. Labourers
  2. Urban poor, such as street vendors and hawkers
  3. Market or trade associations
  4. Industrial workers
  5. Manufacturing units
  6. Long-term tourists
  7. Hospitality sector
  8. Educational institutions
  9. Students
  10. Health institutions


Important notes on the ARHC scheme

  • The ARHC scheme is applicable only till March 2022, which is also the PMAY Urban mission period. All related funding and consideration will be applicable only till then.
  • Projects under the ARHC will be used for a minimum period of 25 years, for only rental housing purposes.


Industry view on ARHCs

The government’s initiative to provide a decent lifestyle to the poor, has gone down well with the real estate fraternity. Ankush Kaul, president (sales and marketing), Ambience Group, noted, “The cabinet’s approval of ARHCs is a kind of move that will strengthen the government’s commitment to ‘Housing for All’. This, if implemented, will create affordable housing for many who are not in a position to buy. Moreover, it will solve the problem of affordable housing shortage in cities.” However, Kaul also said that availability of land and necessary infrastructure to create such a supply, may pose a challenge.

Another challenge that most experts are talking about, is the fact that  ARHCs may get only lukewarm enthusiasm from private participants, since the yields are likely to be low. It may not be viable for developers who have land parcels within city limits. Only time can tell whether the government’s incentives and concessions that include, 50% additional FAR/FSI, tax reliefs at par with affordable housing, concessional loan at priority sector lending rate, etc., to develop ARHCs on their own available vacant land for 25 years, is enough to win over private developers.


PMAY subsidy scheme extension

One of the pertinent questions so far remained whether the centre will extend the last date for the PMAY Credit-Linked Subsidy Scheme (CLSS) for the Middle-Income Groups I & II. The last day to avail of the subsidy, for this segment, was March 31, 2020 while those in the Economically Weaker Section (EWS) and the Lower- Income Group (LIG) have time till March 31, 2022. Finance Minister Nirmala Sitharaman on May 14 announced that the scheme will be extended by a year to FY21. This is aimed towards a Rs 70,000 crore investment in housing projects for the mid-income group.

Given that the objective of Housing for All by 2022 is the main driver behind the PMAY scheme, experts had already pointed out that the centre will be keen to extend it. Now, the extension will benefit an added 2.5 lakh beneficiaries.

In short, those with income between Rs 6 lakh and Rs 12 , that is MIG-I and will get an interest subsidy of 4 per cent on a loan amount up to Rs.9 lakh. Those with income between Rs 12 lakh and Rs 18 lakh, that is MIG-II will get an interest subsidy of 3 per cent on a loan amount up to Rs.9 lakh, as has been the guidelines so far. The PMAY CLSS subsidy amount comes to Rs 2,35,068 and Rs 2,30,156 for the MIG-I and MIG-II scheme respectively and beneficiaries will continue to enjoy it.


How will Coronavirus affect the PMAY scheme?

The Coronavirus pandemic has affected the pace of construction of homes under the PMAY. A slowing economy has already been a problem for a while. After September 2019, demand for PMAY units slackened and experts map it to the liquidity crisis of many housing finance companies and the slump in demand.

“The only way ahead, may be to consider the release of at least 50% of applicable subsidy to eligible beneficiaries, as part of their own contribution and the remaining as per present guidelines linked to loan disbursement. This will revive housing activities fast, to achieve Housing For All,” said Deo Shankar Tripathi, MD and CEO of Aadhar Housing Finance.

“Even if the lockdown is lifted after some time, it will take significant time for the economy to get back to near normal. This can only happen, if the government twists the current process for the issue of applicable credit-linked subsidy of Rs 2.67 lakhs to recognised recipients through creditors, before loan disbursement. This modification will recover affordable housing growth, as envisioned in the Housing for All by 2022 mission,” says Avneesh Sood, director, Eros Group.

“The slowdown in real estate and housing finance arose, after the IL&FS crisis in September 2019. The liquidity crunch in the NBFC segment crushed building activities. As per my view, people who choose this housing section under the PMAY, will find it tough to carry out their commitments, which has now become tougher due to the COVID-19 pandemic,” adds Sood.


Coronavirus and the force majeure clause

The force majeure clause is always a part of government contracts and the same stands true for the PMAY mission.

“That in case there is any delay in the implementation of the mandatory conditions or submission of any periodic reports, etc., by the Second Party (lender), due to the circumstances beyond the control of the Second Party (i.e., Force Majeure), the decision on the matter of extension of time for the implementation of the goals and objectives of HFA shall be at the discretion of the First Party (central nodal agency),” the PMAY scheme guidelines note.

Hence, it is understood that some arrangements will be made between buyers and builders.

Read the full text of the PMAY guidelines here.


COVID-19 public grievances about housing

The Nodal Officer for COVID-19 public grievances for the Ministry of Housing & Urban Affairs is:

Name:- Shri Manish Thakur, Joint Secretary,


Phone Number:- 9599085666



What is the last date to avail of the subsidy under PMAY-U?

The last date to avail of the subsidy under the PMAY-U was March 31, 2020. Given the Coronavirus pandemic and the nationwide lockdown, we await further clarification about a possible extension in date.

What is HUDCO’s contact number?

You can contact HUDCO on their toll free number: 1800-11-6163

Will the Housing for All be extended post 2022?

No official communication has been made regarding extension of the Housing for All mission.



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