The Tamil Nadu Housing Update: Revised House Building Advance And Implications For Homebuyers

Formed in 1947 as a small organization called the “City Improvement Trust” to address the housing needs of Madras City, it evolved into a fully-fledged organization known as the “Tamil Nadu Housing Board” in 1961. This transformation was driven by the increasing demands in the housing sector, fueled by urban growth and migration to urban areas in search of employment opportunities throughout the state.

As a matter of policy, the Tamil Nadu Housing Board (TNHB) ensures the use of quality materials and modern construction techniques. It aims to provide affordable shelter to individuals across various income groups, including the Economically Weaker Section (EWS), Lower Income Group (LIG), Middle-Income Group (MIG), and Higher Income Group (HIG). Housing accessibility is a key focus area for TNHB.

The Hon’ble Minister (Finance & HRM) made the following declaration during his Budget speech to the Legislative Assembly on March 20, 2023.

In response to the rising construction costs, the maximum limit for House Building Advance will be raised to Rs. 50.00 lakh per employee, an increase from the previous limit of Rs. 40.00 lakh, in the upcoming financial year.

The government has made a decision to raise the existing cap of the House Building Advance after careful consideration, as indicated in the notification. Furthermore, based on the directives mentioned earlier, the House Building Advance amount for All India Service Officers will also be increased.

The Government is currently raising the maximum ceiling amount of House Building Advance to the following: –

• The ceiling for House Building Advance has been raised from Rs. 40.00 lakh to Rs. 50.00 lakh (25%) for State Government Employees.
• The maximum House Building Advance has been increased from Rs. 60.00 lakh to Rs. 75.00 lakh (25%) for All India Service Officers.

The revised ceiling amount for House Building Advance will come into effect on the day this order is issued.

Individuals who have been granted House Building Advance at the previous rate but have not yet initiated any installments may be eligible for a loan at the new ceiling, subject to eligibility. This loan can be used for the construction/purchase of a house/flat, and the order previously issued can be amended accordingly.

All pending applications for House Building Advance approval that have not yet been sanctioned due to insufficient funds may be approved in accordance with the revised ceiling limit that is already in effect.

Individuals who received a Home Building Advance at the previous rate but did not complete the construction of their home may be eligible to receive the difference in the increased ceiling amount for construction or for a ready-constructed house/flat.

The increase in the maximum limit for House Building Advance will have an impact on middle-class individuals seeking to purchase a home. The government should reconsider and reduce the upfront payment required for building within a reasonable timeframe. The public expects the Tamil Nadu government to ensure that the quality of its buildings is never compromised.