After the nationalization of the banks, none of the banking institutions ever desisted from giving housing loans to the needy. Not only did the Housing Act grant local authorities a subsidy of certain amount per house but also imposed a specified rate contribution. Later on improvement grants were introduced.

However, as local authority building increased and the subsidy per house was raised to meet higher building costs, the government’s total subsidy bill became uncomfortably high. Hence the general needs subsidy was abolished for future houses, except for one-bedroom dwellings, but selective subsidies remained for slum clearance and overcrowding. Although the obligation on the part of the local authorities to make rate fund contributions was also removed, such contributions nevertheless continued, and indeed increased. Thus in earlier times for the leading Builders Kerala offered a tricky situation and it was difficult to get a foothold in a place dominated by subsidies and rules and regulations of all kinds.

But the government was moving towards greater emphasis on linking subsidies with the financial resources of both local authorities and households. Authorities, which had many low cost pre-1939 houses, were favorably placed compared with those having predominantly modern houses. From 1961 subsidies on new houses were fixed at two levels: $8 per new dwelling for sixty years, or $24 if the authority satisfied a test of financial need. Thus for the first time the principle of a fixed subsidy for sixty years irrespective of changing needs over time had been breached.