Budget And Affordable Homes – the Differences
What Do You Mean By Budget And Affordable Homes?
We use the terms budget and affordable homes very often, but do we know what it actually means?
The Meaning of budget and affordable homes
The real estate sector is very well versed with the terminology budget and affordable homes. These words are used in positioning the units and creating a distinct identity for the project in the minds of customers.
With the launch of government’s Housing for all scheme-2022, the focus is on providing homes to all, budget and affordable homes being of prime importance. According to data of the last 5 years, the affordable housing sector has contributed the most in home sales.
According to a universally accepted definition, affordable units are those which could be afforded by a country’s population that earns less than that country’s average household income. In other words, houses that the low-income households and economically weaker sections (EWS) can afford are termed affordable housing. However, this definition changes according to the context.
Definition by The Ministry of Housing and Urban Poverty Alleviation
The Ministry of Housing and Urban Poverty Alleviation defines affordable housing on the basis of size, price, affordable and income.
- For the Economically Weaker Section (EWS), for instance, an affordable house would mean a unit measuring between 300 and 500 sqft, prices below Rs 5 lakh for which a household has to pay Rs 4,000-5,000 in EMI (equated monthly installment). The income ratios, in this case, should be of 2:3.
- For low-income groups or LIG, an affordable house would mean a unit measuring between 500 and 600 sq ft, priced between Rs 7 lakh and Rs 12 lakh for which a household has to pay Rs 5,000-10,000 in EMI. The income ratios, in this case, should be of 3:4.
- For mid-income groups, an affordable house would mean a unit measuring between 600 and 1,200 sq ft, priced between Rs 12 lakh and Rs 50 lakh for which a household has to pay Rs 10,000-30,000 in EMI. The income ratios, in this case, should be of 4:5.
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