Reserve Bank of India vide circular DBR.BP.BC.No. 74/08.12.015/2014-15 dated March 5, 2015 on “Housing Loans: Review of Instructions” has allowed banks to add stamp duty, registration and other documentation charges to the cost of the house/dwelling unit for the purpose of calculating Loan to Value (LTV) ratio, in cases where the cost of the house/dwelling unit does not exceed ₹ 10 lakh. This has been done with a view to encourage availability of affordable housing to borrowers from economically.

 This was stated by Shri Jayant Sinha, Minister of State in Ministry of Finance in written reply to a question in the Lok Sabha today.

LTV calculation now permits inclusion of stamp duty, registration and documentation charges to ease affordable housing lending. Banks may include stamp duty, registration and other documentation charges in the cost of a house or dwelling unit when calculating the Loan to Value (LTV) ratio for qualifying low-cost housing, thereby treating these transactional charges as part of the property cost for LTV purposes and enabling adjusted loan sizing for affordable housing loans.