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1. Affordable Housing In Urban Areas

  • The development of the housing sector has a direct impact on employment generation, gross domestic product (GDP) growth and consumption pattern in the economy A roof over one’s head is a dream that every human being aspires for. Affordable housing, at present, has become one of the biggest challenges. Skyrocketing prices of land and real estate in urban areas have made houses an expensive affair. Right from government regulations to the financing front, to infrastructure and usage of green technology – all of it plays an important role.

  • Though, housing earlier was never an issue in the Indian context. The joint family system meant that there was one house for the entire family and all the family members lived in the family home. The issue began with migration to cities for better jobs, leading to an advent of the trend of the nuclear family system. This has also led to an increase in the number of people living in slums and squatter settlements in the city.

  • “Affordable housing refers to any housing that meets some form of affordability criterion, which could be income level of the family, size of the dwelling unit or affordability in terms of EMI size or ratio of house price to annual income”

  • Affordable housing has multiple linkages to other aspects of the individual's well-being. Affordable housing has led to better access to health care, to education, and to perceived control and life-satisfaction. It also serves to reduce crime and has significant wealth effects on the residents due to employment stability. It also has a direct and favourable correlation with the nation’s economy, as well as most other real estate segments. Housing for lower-income wage earners increases the economic strength of any city or region, as it attracts inward migration which creates a bigger manpower pool.

  • This, in turn, boosts the viability of opening up industries and businesses in the region, translating into more demand for commercial real estate spaces. Formal and informal retail is also attracted to residential catchments, translating into consummate demand for retail spaces in and around such catchments. Finally, affordable housing in India coexists quite benevolently and beneficially with mid-income housing, as the middle class invariably depends on the services of lower-income earners to keep its show going, so to speak.

  • New Urban Agenda of Habitat III, 2016: Create a mutually reinforcing relationship between urbanization and development, making them parallel vehicles for sustainable development.

  • Sendai Framework: Sustainable and disaster resilient housing

  • Paris Agreement on Climate Change: Focused on the low-carbon and energy transition of the Buildings and Construction sector through fostering the development of appropriate policies for sustainable buildings and energy efficiency in buildings, and allowing a concrete value-chain transformation of the sector.

  • Goal 11 of Sustainable Development Goals: Aims to make cities and human settlements inclusive, safe, resilient and sustainable.

 

1.1. INDIA – Housing Scenario and Challenges

  • In the country – Shortage of 18.78 million housing units – gap being mostly in the economically weaker sections and the low income group (almost 95% of the deficit)

  • 10 states contribute to 76% of the urban housing shortage – U.P, Maharashtra, W.B, Andhra Pradesh, T.N, Bihar, Rajasthan, M.P, Karnataka, Gujarat

  • India’s urban population is estimated to grow to 814 million people by the year 2050

  • The Technical Group on Urban Housing Shortage for the Twelfth Five Year Plan (2012 – 17) defines housing shortage as comprised of the following components:

  • Excess of households over the acceptable housing stock (people living in informal properties)

  • Number of extra households needed due to congestion

  • Number of extra households needed due to obsolescence

  • Number of kutcha households that must be upgraded

  • As the population grows, it may lead to a growth in the number of homeless population as well as short term migrants. The lack of available housing options, combined with limited income and minimal access to home finance for low income borrowers, means that millions of Indian households currently live in cramped, poorly constructed houses/slum areas/shanties. They lack access to a clean and healthy environment, with even basic amenities such as sanitation, clean water, sewage, waste management and electricity often absent. Thus, ‘Affordable Housing’ is an idea whose time has come, and sooner rather than later, planned sustainable urbanisation will have to be by default and not by choice.

 

Other challenges –

  • Scarcity of developed and encumbrance-free land

  • Increased cost of construction

  • Lack of private sector participation

  • Absence of viable rental market

  • Inaccessibility to home loans by poor

  • Land owned by sick PSUs

  • Scarcity of horizontal space in urban areas, which is a result of the permitted floor space index (FSI) in Indian cities being “extremely low”, which ranges between 1-1.5

  • Lack of technological innovations in low cost building material and construction practices

  • Regulatory constraints such as long and cumbersome approval process, environment clearance, lack of clarity in building by-laws and implementation of master plan

 

1.2. Government Interventions

  • In the early years of Independence, flawed policies, unsound planning and fund shortage came in the way of meeting the massive challenge of providing shelter for all. So much so, that a national housing policy was not put in place even four decades after independence.

  • It was only in the post liberalisation period that housing got a fillip, following introduction of a housing policy in 1988 and formation of the National Housing Board (NHB) and Housing & Urban Development Corporation (HUDCO).

  • A key policy framework was evolved to involve private players in building homes and a milestone reform was initiated to allow 100 per cent FDI in real estate in 2005. This was supplemented by a flagship mission of JNNURM to provide shelter for the urban poor, which however, did not prove very effective due to deficient guidelines to states about parking and utilisation of funds.

  • Initiatives such as “Affordable Housing”, “Housing For All by 2022”, “Smart Cities”, softening of lending rates, friendlier REIT norms, etc. are all perceived to be game changers for the industry in the coming years. These are considered to lift both demand as well as supply. Besides these, initiatives such as digitization of land records, change in arbitration norms for construction industry and stricter insolvency laws are incremental catalysts for the good times ahead.

 

2. Land Acquisition Rehabilitation And Resettlement

2.1. (LARR)

  • The linkages between LARR and Housing for All assume significance primarily in the context of scarcity of land for planned development and the overwhelming shortage of adequate, affordable housing in India. The historical failure of ensuring land reform in India is also the context within which the fractured politics of rural-urban and land acquisition have played out.

 

The challenges –

  • To be pragmatic about the difficulty in using LARR and instruments of land assembly for affordable rural and urban housing till now and thereby highlight the need to create housing policies that accounts for this gap

  • To challenge this historical reluctance to use LARR’s provisions for affordable housing

  • The LARR Act, 2013 is expected to have a major impact on the development of large scale townships and affordable housing projects. For example, a provision states that there should be a fixed compensation for acquired land at high levels, which makes the land acquired for affordable housing expensive.

  • The provisions of the LARR Act 2013 therefore, should be a tool to achieve the growth in infrastructure and housing. The LARR Act can be used as a legal instrument to provide for affordable housing for the rural landless, but it is just one part of a much larger strategy of how to ensure that affordable housing for all is implemented.

 

2.2. LARR - some Highlights

  • The Land Acquisition bill has been renamed as the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Bill, 2013. The new act replaces a nearly 120-year-old law enacted during British rule in 1894. It lays emphasis on Rehabilitation & Resettlement

  • The new act concerns only such cases where the land will be acquired by Central or State Authorities for any public purpose.

  • It calls for taking the consent of 80 per cent of land owners for acquiring land for private projects and of 70 per cent land owners for public-private projects.

  • It also tries to lay down a transparent process for land acquisition for industrialization, development of essential infrastructural facilities and urbanization by giving adequate financial compensation to the affected people.

  • It gives priority to the interests of the farmers, landless labourers, dalits and tribals.

  • Multi-crop irrigated land will not be acquired except as a demonstrably last resort measure. Wherever multicrop irrigated land is acquired an equivalent area of culturable wasteland shall be developed for agricultural purposes. States are also required to set a limit on the area of agricultural land that can be acquired in any given district.

  • It also provides for leasing of land to developers, instead of sale, so that the ownership will remain with the original land holders and they can also have a regular income by way of lease rent; the terms of lease to be laid down by the State Government according to type of land, location, market rates etc.

  • The Act clearly enunciates the issues relating to acquisition, award, compensation and rehabilitation and also curtails the discretionary powers of the District Magistrates.

  • 13 Central Acts which are outside the purview of the new Act have to conform to the provisions of compensation and Rehabilitation and Resettlement package within one year of the coming into force of the legislation.

  • Where land is acquired for urbanisation, 20 per cent of the developed land will be reserved and offered to land owning project affected families, in proportion to their land acquired and at a price equal to cost of acquisition and the cost of development.

  • The Consent of Gram Sabha is mandatory for acquisitions in Scheduled Areas under the Fifth Schedule referred to inthe Constitution.

 

3. Financing Affordable Housing

  • Government has accorded ‘infrastructure status’ to affordable housing – Will make project loans affordable, and in turn reduce prices of homes for buyers. This will go a long way as a critical supply side incentive to bring in private investment in affordable housing sector.

  • Budget 2016-17 & 2017-18: Provided the platform for creating an enabling environment with fiscal concessions such as –

  • Direct tax benefits under Section 80-IBA of the Income Tax Act

  • Relaxation in FDI and ECB proposals

  • Standardised usage of carpet area definition

 

3.1. Mortgage reforms:

  • By ways of a new broad-based Credit Linked Subsidy Scheme (CLSS) under PMAY-U to ensure that its benefits reach beyond the EWS and LIG segments. It has also introduced a Marginal Cost of Funds-based Lending Rate (MCLR) for speedy transmission of RBI rate cuts to home buyers.

 

Jawaharlal Nehru National Urban Renewal Mission:

  • Aimed to construct 1.5 Million houses for the urban poor in the mission period (2005-2012) in the 65 mission cities. Two policies under JNNURM targeted housing –

  • Integrated Housing and Slum Redevelopment Programme is a direct housing policy measure

  •  Basic Services for the Urban Poor (BSUP) aims at providing entitlements such as security of tenure, affordable housing, and services such as water, sanitation, health and education and social security to low-income segments

  • Affordable Housing in Partnership (AHP), 2013: A market solution based approach by involving private players

  • Rajiv Awas Yojana (RAY), 2012: This programme aimed at providing affordable housing to the urban poor; creating a slum free India. On May 2015, Rajiv Awas Yojana (RAY) was rolled over into the Housing for All (HFA) by 2022 policy. The two major objectives of RAY can be summed up as follows:

  • Legal recognition of slums and bringing them into the formal system

  • Redress the failures of the formal system

  • Housing for All (HFA): Envisages providing every family with a pucca house with water connection, toilet facilities, 24x7 electricity supply and access

  • Pradhan Mantri Awas Yojana-Urban (PMAY-U): Aims at constructing more than two crore houses across the length and breadth of the nation within a span of next seven years (i.e by 2022).

  • Provides central assistance to Urban Local Bodies (ULBs) and other implementing agencies through State/UTs. States have been given the responsibility to formulate, approve and implement the project.

  • The target beneficiaries of the scheme would be poor and people living under Economically Weaker Sections (EWS) and Low Income Categories (LIG) categories in urban establishments of the country.

  • The programme has four verticals:

  • Credit linked Subsidy scheme (CLSS)

  • In-situ rehabilitation of existing slum dwellers using land as a resource through private participation

  • Affordable housing in partnership

  • Subsidy for beneficiary-led individual house construction/enhancement

  • Has introduced built-in-flexibility, demand driven approach and a comprehensive Housing for All Plan of Action for each of the ULBs

  • Technology Sub-Mission: Has been set up to facilitate the process to enable quality construction, green technologies, preparation of flexible design layouts as per the various geo-climatic zones, assist rapid construction, scale up the disaster resistant and sustainable strategies adopted for construction

  • Atal Mission for Rejuvenation and Urban Transformation (AMRUT):

  • The purpose of the scheme is to

  • Ensure that every household has access to a tap with assured supply of water and a sewerage connection;

  • Increase the amenity value of cities by developing greenery and well maintained open spaces (parks); and

  • Reduce pollution by switching to public transport or constructing facilities for non-motorized transport (e.g. walking and cycling).

  • Housing for all by 2022: It aims at

  • Slum rehabilitation of slum dwellers with participation of private developers using land as a resource;

  • Promotion of affordable housing for weaker section through credit linked subsidy;

  • Affordable housing in partnership with Public & Private sectors

  • Subsidy for beneficiary-led individual house construction or enhancement

 

4. Regulating The Real Estate Sector

  • Real Estate Regulation Act (RERA): focusses on transparency, accountability and protection of home buyer interests.

  • REsRA provides for regulatory oversight and puts in place roles and responsibilities around four pillars of the real estate sector: regulators, developers, brokers and consumers.

  • RERA has been able to weed out unscrupulous fly-by-night brokers, leaving more room for serious professionals – For the very first time brokers have been recognized as an industry

  • Since land is a state subject, each state has to promulgate its own Act and establish its regulatory authority

  • Extends to the whole of India except J&K It regulates both commercial and residential real estate projects.

  • Bill seeks to set up Real Estate Regulatory Authority in states and union territories to oversee real estate transactions.

  • Bill makes registration of real estate projects and real estate agents with the authority mandatory.

  • It makes mandatory disclosure of details of all registered projects, including those about the promoter, project, layout plan, land status, approvals, agreements along with details of real estate agents, contractors, architect, structural engineer etc.

  • No pre-launch will be allowed without getting all approvals from the local authorities and without obtaining registration from the regulator. All incomplete projects are to come under the regulation.

  • The bill covers any project that is more than 500 sq meters or has more than eight apartments (states can lower this requirement further).

  • The authority can even order "compensation" to consumers in case of misleading advertisements.

  • Developers will have to provide brief details of projects launched in the past five years, both completed or under-construction, and the current status of the projects. These may be made available on the regulator's website so buyers can take an informed decision.

  • Disclosure of carpet area is a must as per the Bill.

  • The Real Estate Bill has also made it compulsory for builders to deposit 70 per cent of the amount raised from buyers into an escrow

 

5. Green Technologies In Affordable Housing

  • Green Technologies in Affordable Housing

  • World’s population in 2050 – 9 billion

  • World’s urban population

  • Present: 50%

  • 2050: 70%

  • India’s urban population

  • 2030: 40.8%

  • 2041: 50%

  • Housing sector - 40% of energy consumption; leading to a huge demand for affordable, green housing.

  • Energy efficient housing has the following components

  • Lighting

  • Space utilization

  • Ventilation

  • Energy efficient building materials

  • Energy efficient equipment

  • Alternative and renewable sources of energy

  • Need for reducing energy demand at source with ‘green’ and ‘intelligent’ buildings

  • More sustainable in long run

  • Often with little incremental cost

 

5.1. Advantages of Green Housing

  • Enhances quality of Life: Leads to higher productivity as well as income generating capabilities

  • Environment friendly: Saves huge amount of resources like power and water; use of renewable resources for construction; waste efficiency, reuse and recycling, etc.

  • Increased revenue: For both end user and developer. Added cost of LEED certification is about 2%-5% of overall cost of a building. Developer can charge a premium for “Green Building” certification and the consumer will, in turn, have higher resale value and higher rental yields.

  • Lower costs: Sustainability implies profitability. Green building saves 30%-40% of the power consumption. Hence reduced electricity bills will bring in huge savings. The additional cost to incorporate green building feature has a pay back of just 2-5 years with substantial reduction in operational costs

  • Government incentives: Tax and premium rebates for buildings that meet certain minimum conditions under rating programs; many states in India offer incentives to developers by extra FSI for efficient buildings for no cost, increasing value proposition for them

  • Marketing Tool: Builders can add green building certifications to their list of credentials to attract more customers and investors, as well as draw interest to their projects.

  • Challenges in green and sustainable building developers and buyers

  • Additional construction cost, price constraints, difficulty in sourcing sustainable building materials, technologies and service providers or facilitators in India and a long gestation period makes developers hesitant.

  • Design must consider the entire supply chain—from material sourcing, energy modelling, resource reuse, civic amenities and waste disposal

  • Buyers not keen to pay a premium for green residential projects. Lack of demand and awareness among buyers also makes developers hesitant to invest in this segment.

  • Buyers need to be convinced that total ownership cost, including maintenance, over the life cycle of the property will actually offer significant savings.

 

6. Housing The Poor In Smart Cities

  • Smart Cities Mission (SCM): A flagship mission of the MoUD that aims to promote cities that provide core infrastructure and give a decent quality of life to its citizens through application of smart solutions – area based development is a key element

  • “Benami” Transaction Prohibition (Amendment) Act: Aims at establishing a regulatory mechanism to fight against tax evasion and improve transparency. Will have long-term positive effects, as all of the transactions will be carried out in the name of the real owner which will boost transparency in the residential market and lower risks, which will eventually hike up residential properties transactions

  • Impact of GST: Aims to dismantle federal tax barriers in order to create a single, unified market with tax transparency and predictability and improving supply chain efficiency. Reduction in compliance to bring in efficiency whereby the credit input for excise duty etc. levied on materials such as cement, steel, etc., is involved.

  • National Urban Housing and Habitat policy, 2007 (Ministry of Housing and Urban Poverty Alleviation, 2007): The policy seeks to promote a symbiotic development of rural and urban areas.

  • Provision of “Affordable Housing For All” with special emphasis on vulnerable sections of society such as Scheduled Castes/Scheduled Tribes, Backward Classes, Minorities and the urban poor.

  • This Policy takes note of the substantive gap between demand and supply both for housing and basic services, and seeks to assist the poorest of poor who cannot afford to pay the entire price of a house by providing them access to reasonably good housing on rental and ownership basis with suitable subsidization.

  • Develop innovative financial instruments like development of Mortgage Backed Securitization Market (RMBS) and Secondary Mortgage Market. It also seeks to attract Foreign Direct Investment (FDI) in areas like integrated development of housing and new township development.

  • Draws from innovations in the area of housing and infrastructure in India and elsewhere, and gives a menu of actionable points which inter-alia includes Public-Private-Partnerships, conservation of natural resources and formulation of regulations & bye-laws that are environment friendly, investment-friendly and revenue-generating.

  • Aims to promote development of cost-effective, quality approved building materials and technologies with a view to bringing down the cost of EWS/LIG houses

  • Aims to complement poverty alleviation and employment generation programmes for achieving the overall objective of “Affordable Housing for All” or All” with sustainable development

  • Lays special emphasis on the development of North-Eastern States on account of the fragile ecology of the North-Eastern Region as well as the need to accelerate the pace of its socio-economic progress.

  • Swachh Bharat Mission (Urban): Aims to eliminate open defecation, eradiate manual scavenging and incorporate modern and scientific Municipal Solid Waste Management – ensuring provision of basic facilities related to sanitation

  • Deendayal Antyodaya Yojana-National Urban Livelihood Mission (DAY-NULM): Ensures availability and access of the urban homeless population to permanent shelters including the basic infrastructure, and cater to the needs of especially vulnerable segments of the urban homeless

  • National Urban Health mission (NUHM): To provide equitable and quality primary health care services to the urban population with special focus on slum and vulnerable population.

  • Revised Integrated Housing Scheme (RIHS):

  • For: The workers engaged in Beedi/Iron Ore Mines, Manganese Ore & Chrome Ore Mines (IOMC)/Limestone Ore Mines, Dolomite Ore Mines (LSDM) /Mica Mines and Cine Industries, registered with the Labour Welfare Organisation (LWO).

  • Provides housing subsidy of Rs. 1,50,000/- per worker for construction of house to be paid in three installments directly into the bank account of the beneficiaries.

  • Aims to promote development of cost-effective, quality approved building materials and technologies with a view to bringing down the cost of EWS/LIG houses

  • Aims to complement poverty alleviation and employment generation programmes for achieving the overall objective of “Affordable Housing for All” or All” with sustainable development

  • Lays special emphasis on the development of North-Eastern States on account of the fragile ecology of the North-Eastern Region as well as the need to accelerate the pace of its socio-economic progress.

  • Swachh Bharat Mission (Urban): Aims to eliminate open defecation, eradiate manual scavenging and incorporate modern and scientific Municipal Solid Waste Management – ensuring provision of basic facilities related to sanitation

  • Deendayal Antyodaya Yojana-National Urban Livelihood Mission (DAY-NULM): Ensures availability and access of the urban homeless population to permanent shelters including the basic infrastructure, and cater to the needs of especially vulnerable segments of the urban homeless

  • National Urban Health mission (NUHM): To provide equitable and quality primary health care services to the urban population with special focus on slum and vulnerable population.

  • Revised Integrated Housing Scheme (RIHS):

  • For: The workers engaged in Beedi/Iron Ore Mines, Manganese Ore & Chrome Ore Mines (IOMC)/Limestone Ore Mines, Dolomite Ore Mines (LSDM) /Mica Mines and Cine Industries, registered with the Labour Welfare Organisation (LWO).

  • Provides housing subsidy of Rs. 1,50,000/- per worker for construction of house to be paid in three installments directly into the bank account of the beneficiaries.

 

6.1. Social Challenges in Housing Schemes

  • Challenges of Urban Slums: When, as a result of the growing urbanisation, the poor from the villages are required to shift to the cities, they continue to stay in the slums but this transition gives rise to various challenges. The challenges are as follows:

  • Health concerns in urban areas

  • Threats and extortion demands by real estate mafia and the corrupt government officials

  • Urban slums are usually located at prime spots in the urban areas. Hence, they block revenue which the government could have earned from these locations.

  • Measure for facing Urbanisation: To tackle problems such as those mentioned above and gear up for the increasing pressure due to urbanisation, various policy measures have been undertaken.

  • United Nations focuses on making cities a better place to live on through Sustainable Development Goal 11 which targets to make cities inclusive, safe, resilient and sustainable.

  • The year 2016 also saw Habitat III summit in Quito, Ecuador promoting a “New Urban Agenda” of giving slum dwellers upgraded housing with basic services by 2030.

  • Recently, Government of India also introduced two new interest-subsidy schemes under the PMAY to make housing finance more affordable.

 

PMAY is being rejected

  • Tackling urbanisation, providing low cost housing to all with the ‘Housing for All’ target for the year 2022 have been some of the central focus areas for policy by the Indian government. Irrespective of this emphasis, still a significant percentage of beneficiaries are not responding positively to the scheme. This segment of the population does not avail benefits provided under the scheme. This also leads to low indicators with respect to success of government schemes and policies and social development of the country.

 

The reasons for such a situation are:

  • Lack of affordable housing finance is a limitation for which the government also introduced the above mentioned interest subsidy schemes.

  • Stakeholder participation at the time of policy making is very low and as a result they feel unsatisfied with the provisions in the schemes.

  • Inefficient subsidy targeting also leads to vacancies in the housing schemes because the subsidy fails to accurately address the problem of affordability.

  • The housing schemes involve relocation of the people. As a result of the relocation, they tend to get disconnected from their social ties and relations.

  • Social Disconnect: Among the reasons mentioned above, it is observed from studies that the feel of disconnect and loss of social connections is a major reason for the beneficiaries to reject the housing provided by the government.

  • Psychological Support: The relocation under housing schemes leads to a feeling of isolation. Social relations and community provides them a sense of support and comfort in their troubled days. Those residing in slums seek and provide a lot of psychological and material support from each other which the State cannot provide.

  • Financial Comfort: Slum dwellers rely on each other for their borrowing needs in a regular manner. Moving to new areas also impacts their earning capacity and labour force participation.

  • Socio-Economic Development: There is a greater need to understand what the individuals moving to a new place will gain or lose and what will be there response to the shift. This is because it is mentioned as a result of studies that benefits give the best results only if the people are made to relocate at an early age. Hence, a targeted approach is very important.

 

Entry of Private Players in Affordable Housing

  • Backed by a strong mandate of the Central Government, whose recent announcement to start building homes for the urban poor across 305 cities and towns is expected to boost the economy, the Affordable Housing segment has the potential to offer a multitude of opportunities to all stakeholders, provided there are concerted and aligned efforts in a common direction.

  • Since the beginning of the twenty first century, a slew of regulatory reforms such as allowing foreign direct investments, improving access to credit by households, providing tax incentives on housing loans, developing special economic zones and thrust on infrastructure development, coupled with high economic growth, have propelled private sector participation in urban housing development. However, it has largely resulted in the development of Middle Income Group (MIG) and High Income Group (HIG) houses, leading to significant shortage of EWS/LIG or affordable houses.

  • In this context, the private sector can play a significant role in bridging the current deficit of Affordable Housing. In an ideal PPP scenario, the public sector could look into aggregating land for projects, providing single-window and time bound clearances, redrafting the local development byelaws to suit the requirements of Affordable Housing projects and re-evaluating the taxes and levies from the perspective of reducing cost of home ownership for the target segment; private sector entities can leverage core competencies such as Planning & Design, Project Development, Technology best practices, Project Financing, Human Resources, Sales and Marketing.

  • An increasingly attractive investment proposition: On the back of the new regulations which the government has deployed to make Indian real estate a more credible and logic-driven market, property investors focusing heavily on affordable housing for the middle and lower income groups, as this is by far the most attractive investment option now. Affordable housing is now a highly profitable long-term proposition for real estate investors, and developers also stand to seriously profit from creating it.

  • Affordable housing supply in the right cities: The trend of nuclear families driven by young professionals is increasing in the country, especially the metropolitan cities where IT and

  • other major corporate sectors hold sway. Young professionals are eager to own homes and settle down with their new families, so affordable housing is a major hit in such cities.

  • Encouraging private sector participation in urban affordable housing development requires a coordinated effort from central and state governments. A key role of the central government in the ‘Housing for all by 2022’ vision would be that of a facilitator by creating an enabling environment through:

  • Introducing statutory and regulatory reforms in land acquisition, and a real estate regulator, and review archaic regulations governing the real estate sector

  • Streamlining clearances and approval procedures required from central government agencies such as the Ministry of Environment and Forest, and the Ministry of Civil Aviation.

  • Channelising higher and long term investments in the sector by providing necessary tax and non-tax incentives

  • The execution responsibility would lie with States as according to the Indian Constitution; housing and urban development is a State responsibility. States should consider the following suggestions to expedite urban affordable housing development:

  • Decentralise decision making by empowering ULBs

  • Streamline the approval process by introducing a single-window clearance mechanism

  • Develop PPP framework to encourage private participation

  • Rationalise various indirect taxes levied on housing.

 

Factors restricting private participation in urban affordable housing development

  • For the partnership to work, the developer needs to de-risk himself from costs of land acquisition. Higher rate of returns and shorter breakeven period can be achieved in an affordable housing project, by adopting the following measures:

  • Entering into a Joint Development Agreement (JDA), Joint Venture (JV) with landlord or Public Private Partnership (PPP) with government authorities for land where approvals are in place

  • Shortening the time period for construction

  • Lowering the cost of construction

  • Low ticket size to ensure 100% sales within a short time period

Yojana September 2017

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