India Inc asks Centre to merge housing policies

Union government should try to merge various policies at a point to address housing shortage issue in India, an ASSOCHAMJLL joint study has said.

“The Pradhan Mantri Jan Dhan Yojana ( PMJDY), which mainly targets lower- end of pyramid, should be used to provide housing finance to the account owner, thereby directly catering to the targeted segment," said the study.

Economically weaker section ( EWS) and lowincome group ( LIG) categories are generally not given access to loans because of many reasons like - lack of proper documentation, higher credit and default risk, unavailability of guarantor and others, it noted.

Besides, the study said income of this category is either uneven throughout the year or is below the ‘ viable threshold,’ to ensure repayment of the loan.

Absence of a developed market for financing home buying results into lacklustre supply because developers of affordable housing face a slowdown in absorption of constructed units, the study highlighted.

The study said that the development of affordable housing has consistently been a challenge due to reasons like - land cost and availability, practicality of affordable housing definition, complicated regulatory process for approvals and others.

“Lack of financing option for land acquisition, poor adoption of technology in construction, dubious credentials of developers, underdeveloped mortgage finance market, tedious know your customer ( KYC) norms, co- ordination and marketing of policy and higher cost of funds for housing finance companies ( HFCs) are key supply- demand side challenges being faced by the affordable segment in India,” it said

“Relaxing the norms specifically for affordable housing segment can boost the depth and width of housing financing market like for example, making state mandated Aadhar card an acceptable identification for getting a loan,” suggested the ASSOCHAM- JLL study.

Empowering EWS/ LIG categories with lower interest rates for home loans will reduce inventory in the market and ultimately benefit the buyer, it said. Reducing cost of financing for developers and finalising various long- term funding options like real estate investment trusts and real estate mutual funds will help them avail cheaper project financing for development of affordable housing projects, added the study.

Relaxing the norms specifically for affordable housing segment can boost the depth and width of housing financing market — ASSOCHAM- JLL