Low-cost housing is high on the agenda of Government.

In the Union Budget 2017-18, the Government awarded “infrastructure” status to the affordable housing projects.

Infrastructure status not only opens up more low-cost funding options to these projects, but the taxation benefit offered to them encourages developers to launch more such projects.

Now it’s the time to provide one more booster shot to affordable housing.

Employees’ Provident Fund Organisation (EPFO) is set to launch an affordable housing scheme for its 4 crore subscribers.

About two years ago, the EPFO had appointed a committee to consider the proposal of housing scheme for people working in the formal sector. The panel has nodded in favour of the scheme.

As a result, securing advance from your EPF contributions and pledging future contributions as future EMIs will soon become a reality.

As per the various media reports, the scheme might be launched soon after the code of conduct, on account of state assembly elections, gets lifted. In other words, once the final round of Uttar Pradesh elections is concluded, the scheme might be launched anytime.

Although the details of the schemes are yet to be announced formally, it looks like the employees of the same organisation along with their employer will have to form a 20-member housing society group, to derive benefits under EPFO promoted housing scheme.

Such housing society groups will be allowed to club and claim all the benefits available under various schemes of the Government viz. Pradhan Mantri Awas Yojana. EPFO is likely to play the role of facilitator. State promoted builders, banks, and housing finance companies may also be involved in the initiative.

Possible impact of the scheme…
The scheme will be beneficial to those who occupy the lower income group. They work their entire lives, yet can’t earn enough to buy their own house.  As the EPFO promoted scheme will allow housing society groups to club all-benefits under one roof, it would address the problem of homeless people working in the formal sector.

However, the inflexible structure of the scheme may make it difficult for the smaller organisations to form a group of 20 to be able to fully receive the benefits of the scheme. In other words, employees working in bigger organisations stand to benefit more.  It’s worth waiting for the final draft, though.

Moreover, monitoring the progress of the scheme would be another issue as the Government housing schemes often face bureaucratic hurdles.

End note...
While one derives the benefit of the EPFO’s housing scheme, one shouldn’t forget that, EPF contributions are meant for the old age. Thus, one must be cautious about pledging of future EMIs and premature withdrawals.

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