One agenda that has been priority for the real estate sector is to provide affordable housing to all. However, challenges within the sector are limiting the efforts by private developers to provide housing for Economically Weaker Sections (EWS).
The challenges that the real estate industry is facing include high land cost, lesser floor space index (FSI), poor infrastructure, no incentives from government (like loan subsidy), no benefits on customs, excise duties, huge escalation in cost of construction, pre-fabricated houses not an acceptable formula.
This refrain emerged at the roundtable conference on the private sector participation in affordable housing organised by NAREDCO in New Delhi on Thursday. Speakers reiterated the need for the Central Government and the private sector to come together to make affordable housing a reality.
It was noted that on its part, the Ministry of HUPA, Govt. of India, has announced affordable housing in partnership schemes and introduced fiscal incentives in the 2012-2013 Union Budget. These include amendment to Section 35AD for extending investment-based deduction of 150% of capital expenditure in affordable housing, exempting service tax on low-cost housing of less than 60 sq metres, setting up mortgage risk guarantee trust fund to cover risk of bankers for lending to low-income borrowers and 1% interest subvention on housing loans up to Rs 15 lakh for house costing up to Rs. 25 lakh.
Navin M Raheja, President, NAREDCO and CMD, Raheja Builders, said, “Over the last 60 years we have failed to give appropriate housing in the country and still there is a shortage of over 26 million units. In fact, what we have actually given are jhuggis and slums like Lal Dora etc. We must introspect if we are working on right policies or not, and whether these policies will ever provide housing to all.”
Sunil Mantri, Vice-president, Naredco added that the developers have been working on various models to provide affordable housing in the country but there has been a long list of issues the builders are facing like no benefits given by the Central Government in terms of customs, excise, taxes, etc. Land not available below Rs 1,000 per sq ft, rising cost of construction and unavailability of retail loans are the other issues.
Mantri said that in order to promote affordable housing in the country, land should be sold to the builders at a nominal cost and there should be a provision of at least 25% land being allotted for only affordable housing projects. Moreover, waivers should be provided to the builders along with loan facility for developing affordable housing projects.
Business models need to followed along with the help of market forces rather than just talking about problems and suggestions, said Susheel Kumar, Joint Secretary (Housing), Ministry of HUPA, Govt. of India. “Market forces would mean some efforts from the builders in providing affordable housing, efforts from the banks in providing access to credit for the poorer sections as half of those 27 million have the ability to pay off loans and the rest need to bank on the rental housing only,” Susheel Kumar added.
R V Verma, Chairman, National Housing Bank (NHB), Vikram Jain, Lead, Low income housing practice, Monitor Group, Mumbai, Raghav Garg, MD, Garg Group, Sanjay Chawla, CEO, Era Landmarks Ltd, P K Tripathi, President, Unitech Ltd also shared their views on the topic.