WILL BANKS FINANCE COUNTRY HOMES?
NHB to consider lending once policy is notified
Farmhouses today are agriculture land and hence cannot be considered for housing loans disbursed by banks. It remains to be seen whether country homes, to come up in the green belt of Delhi’s Master Plan 2021, will be treated as housing units once the new policy is notified by the ministry of urban development and adopted by the state governments.
According to R V Verma, chairman and managing director, National Housing Bank, the apex institution for housing finance in the country, once the country homes policy is notified by the ministry of urban development, and adopted by the state governments, “we will consider permitting lending for these units. For the country homes to be considered for housing loans, they need to be recognised by the government as legal units. Only if they satisfy and conform to all planning regulations and laws, they will be treated as legal units to be financed by the formal financial machinery — the banks and the housing finance companies. The infrastructure in the area — sanitation, water supply and electricity also need to be developed and legalised simultaneously.”
“If banks start disbursing housing finance to country homes, it will open new avenues, an entirely new asset class for banks to finance. Once they are recognised as a formal housing asset class for which housing finance is allowed, FDI compliance may also kick in eventually,” points out Anckur Srivasttava of Gen Real Advisers.
As per the FDI guidelines under chapter 6, FDI is not allowed for aggregating agriculture land. It remains to be seen how FDI can be attracted into compliant projects exceeding 50,000 sq m of built-up space, Ramesh Menon, director, Certes Realty Limited.
The policy on farmhouses/country homes passed by DDA has two components. One part deals with regularising the existing farmhouses, generally of size 2.5 acres and above and the other allows for construction of country homes on a minimum plot size of one acre. It lays down that “all existing farmhouses in the proposed urban extension area that had come up prior to February 7, 2007 and also those where sanctions had been sought prior to February 7, 2007, but accorded after the date by the regulatory authority shall be regularised and redesignated as country homes.” The policy is yet to be approved by the ministry of urban development.