Current Realty Law Does Not Support Affordable Housing

Land shortage and expensive housing options have raised the demand for affordable houses in the NCR. Although the government initiated various policies to ameliorate the situation, these initiatives have not influenced existing policies, which is a hurdle in the growth of affordable housing.
In a recent conference organized by National Real Estate Development Council (Naredco) on the participation of the private sector in affordable housing, developers-promoters-builders and government agencies spoke about the need for public private partnership (PPP), which they felt would make affordable housing a reality.
Affordable housing is the crying need of the day and instead of playing the blame game, the central government and builders should join hands to minimize the shortage of 26.53 million units, primarily in the EWS (economically weaker section) and LIG (low income group) categories. A critical issue that needs to be addressed is why the private sector is not coming forward in a major way to develop affordable housing projects in the country.
The Union ministry of Hupa (Housing and Urban Poverty Alleviation) announced affordable housing in partnership schemes with fiscal incentives in the 2012-2013 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 houses costing up to Rs 25 lakh.
Concerns voiced by builders and realtors, which they feel are coming in way of their playing a greater role include availability of land, long-drawn project approval procedures and licensing, abnormal central and state taxes, high cost of credit and lack of proactive state policies.
Susheel Kumar, joint secretary (housing) in ministry of Hupa, says: “To make affordable houses a reality, business models need to be followed, along with the help of market forces rather than just talking about problems and suggestions. The market forces would mean some effort from the builders in providing affordable housing, effort from the banks in providing access to credit for the poorer sections, as only half of those 27 million needing housing have the ability of pay off loans; and the rest need to bank on the rental housing alone.”
The Ghaziabad Development Authority (GDA) has made plans to construct lowpriced houses and is set to overhaul the building bylaws and redraft them on the lines of those prevailing in Delhi.
The GDA will build 4,300 houses for lower-income groups, but that is not enough. There are thousands that require affordable housing and the alternative is to bring in private players and give them incentives. An additional 5% FAR will be allowed for projects that offer services to residents like clubs, shops and entertainment sections.
Noida Extension, The Crossings Republik on NH-24 and Raj Nagar Extension in Ghaziabad are the best examples when it comes to showcasing affordable housing projects in the NCR.
Also, houses in projects like Paramount’s Symphony, Supertech’s Livingston, Assotech’s The Nest, and Panchsheel’s Wellington (in Crossings Republik) are reporting a good appreciation today. With the increase in floor area ratio (FAR), the authorities have helped developers in developing and delivering affordable-range projects in bulk.
Builders and developers like Raheja, Ansals, BPTP, Vatika Group, RMS Group, ATS, Siddharth Buildtech, Earth Infrastructure, Mahavir Hanuman Group, Amrapali, Assotech, Paramount, Panchsheel, Supertech, Ajnara, Mahagun, etc, are offering low-cost affordable houses in Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad, Kundli-Sonipat, Baghpat Road and Tronica City.
Development authorities of Noida-Greater Noida, the Ghaziabad Development Authority, the UP Awas Vikas Parishad, the DDA, and the NBCC are also undertaking various affordable projects in the NCR.
Navin M Raheja, the president of Naredco, says: “Over the last 60 years, we have failed to provide adequate housing in the country with a shortage of over 26 million units, at the last estimate. In fact, what we have actually given are jhuggis and slums like Lal Dora. We must revisit our laws and priorities to see if we are working on right policies or not, and whether these policies will ever provide housing to all.”
Sunil Mantri, vice-president of Naredco, says, “Developers have been working on various models to provide affordable housing in the country but there has been a long list of impediments the builders face, which the government is not ready to address, like: no benefits given by the central government in terms of customs, excise, taxes; land not available below Rs 1,000 per sq ft; rising cost of construction and non-availability of retail loans.”
Rakesh Yadav, the managing director of Antriksh Group, says: “Nearly 30-40% of the cost of a house depends on the cost of land. In order for us to provide affordable houses, the government must reduce the price of land. Waivers should be provided to the builders along with loan facility for developing affordable housing projects.”
In 2009, the realty market in the NCR took a U-turn with developers shifting focus from luxury villas, penthouses and apartments and turning their attention upon affordable quality homes; this was the call of the hour, as there was a recession in the property market.
Some affordable housing projects are nearly ready like Ansal’s Megapolis, Panache Homes at Omaxe Palm Greens in Sector Mu in Greater Noida, Landcraft River Heights, Skytech’s Merion Residency, Gaursons’ Gaur Cascades in Ghaziabad along NH-58 (Raj Nagar Extension), ILD’s Spire Greens in Sector 37C, Raheja’s Navodaya in Sector 92, Siddhartha’s Laguna Oaks and Pal City Park in Gurgaon’s Sector 95, Raheja’s Vedanta in Sector 108 in Gurgaon, KLJ Greens in Faridabad’s Sector 77, Uppals Jade in Sector 86 and Omaxe’s Panache Homes in Sector 78 in Faridabad.
Kapil Agarwal, the managing director of AMR Infrastructure, says: “Affordable housing has become the top priority for private and public sector real estate developers in the NCR region. Various financial offers made by banks for funding affordable housing projects in the NCR have encouraged developers and promoters to focus on this segment.”
Anuj Chaudhary, the director of Panchsheel Buildtech Pvt Ltd, says: “The government has begun to show concern over the housing shortage in the country and has initiated various policies to manage the situation. But, these initiatives have not completely influenced existing policies, which are an obstacle in the growth of this segment. We have made efforts to fulfil the housing dreams of people with low income by offering projects like Willington in Crossings Republik.”
Source – TOI

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