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UP Cabinet Approves Model Costing Guidelines

Dec 27 2025

In a major policy decision aimed at boosting affordable housing, the Uttar Pradesh Cabinet led by Chief Minister Yogi Adityanath has approved the Model Costing Guidelines – Basic Principles 2025. The newly approved guidelines are expected to reduce prices of unsold plots and houses offered by Development Authorities and the Uttar Pradesh Awas Vikas Parishad (UPAVP) across the state.

The decision was taken in the Cabinet meeting held earlier this week and is being seen as a significant step towards transparent pricing and faster disposal of vacant government housing stock.

What Are the Model Costing Guidelines 2025?

The Model Costing Guidelines 2025 introduce a standardized formula for pricing government housing projects in Uttar Pradesh. Under the new rules, property prices will be calculated based on:

  • Land acquisition cost

  • Internal and external development expenses

  • Construction cost of buildings

  • Interest capped at SBI MCLR + 1% only

This reform aims to eliminate arbitrary pricing and make homes more affordable for common buyers.

Up to 25% Discount on Unsold Plots and Houses

To ensure faster sales of long-pending inventory, Development Authorities and UPAVP will now be allowed to offer discounts of up to 25% on unsold properties.

However, officials clarified that:

  • The discounted price cannot be lower than the initially fixed base price

  • The provision is meant to balance affordability while safeguarding government revenue

Extra Discounts for Early Payment by Buyers

Homebuyers making lump-sum payments will receive additional financial benefits:

  • 6% discount for payment within 45 days

  • 5% discount for payment within 60 days

  • 4% discount for payment within 90 days

This measure is expected to encourage quicker transactions and improve cash flow for development authorities.

Premium Charges Reduced for Corner and Park-Facing Properties

Earlier, properties located on:

  • Corner plots

  • Park-facing locations

  • 18-metre wide roads

attracted additional charges of 8% to 10%.
Under the new policy:

  • The premium has been capped at 5%

  • If all three advantages apply to a single property, the maximum additional charge will not exceed 12%

Interest Rate Reduced to 8% for EWS and LIG Housing

In a major relief for economically weaker sections, the Cabinet approved:

  • 8% interest rate for EWS (Economically Weaker Section) housing

  • 8% interest rate for LIG (Low Income Group) housing

This move aligns with the government’s goal of promoting affordable housing and home ownership among low-income families.

Impact on Homebuyers and Real Estate Sector

According to officials, the Model Costing Guidelines – 2025 will:

  • Make government housing schemes more affordable

  • Speed up the sale of vacant plots and flats

  • Improve transparency in pricing

  • Strengthen the housing and real estate sector in Uttar Pradesh

Experts believe the policy will particularly benefit first-time homebuyers and middle-income families.