Affordable housing has to be really affordable
AJOY MEHTA: Today, 50 per cent of Mumbai is in slums and 22 per cent lives in cessed buildings, which need to be demolished and rebuilt. So, 72 per cent of Mumbai is living in substandard housing. As a policy, we said that 72 per cent of Mumbai is entitled to free housing. We came out with an SRA scheme and a redevelopment scheme. Builders would build free houses, for which they would get an incentive FSI with which to build their sale building, make money and cross-subsidise this housing. If you spend one generation in a slum, you get a free house, was our message then.
The new government wants to break this vicious cycle through concept of affordable housing, how do you quantify this concept? The national housing policy prescribes affordable house as what you could buy after five years of your working life. We looked at the median incomes of Mumbai, to get a fix on the amount.
This comes as impractical because there is hardly any free land and also the corporation taxes new constructions heavily, around Rs 3,500 per square foot. We earn around Rs 5,000 crore from this annually. Somewhere this taxation has become anti-housing and the footprint of taxation has become smaller and smaller. Octroi has gone away, which was a very secular tax, unlike property tax.
The footprint here is very small and this must be increased. Therefore the government has now agreed to compensate us for the octroi.
Coming back to increasing supply, one is obviously higher FSI, Mumbai has to grow taller. Then to handle transport load we need the metro systems, to help create and connect satellite cities. That is why I said that by 2034, Mumbai population drops to 11.44 crore, because a lot of satellite cities like Mira, Bhayander, Thane are going to develop. Metros would see that they get ferried comfortably.
We also have a huge area, which was marked as no-development zone in the 1991 plan. The then planners were unsure about how Mumbai would evolve and so they blocked some spaces, which we have opened up in the new proposed plan with a pre-condition. A developer must create affordable housing on one-third of the space and hand over to the government. One-third is saleable area for the developer and one-third demarcated as open spaces.
The affordable housing component would be allotted at the median price through a lottery system, for which you should have stayed 15-20 years in Mumbai to be eligible. I think this will break the logjam and you will see results.
NIRANJAN HIRANANDANI: In most Indian cities, you get housing at Rs 3,000-5,000 a square foot, but not in Mumbai. As an island, there is land shortage. Demand has seen the land price just go up drastically. They tried to throw people out of Mumbai which did not work because jobs are here. People would agree to stay in slums and then that got political acceptance.
From zero unauthorised houses in Mumbai in 1947, today there are 55 per cent such houses here.
The development plan objective is to provide sufficient amount of housing, all over the MMR (Mumbai Metropolitan Region). Building cost can be affordable when there is scale. Beyond that, elements like land cost, development cost and costs like stamp duty, GST and other things, impact prices.
As of now, the Chief Minister has announced a programme to make 5 lakh houses on basis of cost of construction. So if you have 400 square feet, the cost of construction is Rs 3, 000. They want to give 12 lakh house for 10 per cent amount upfront and the rest to be paid over 30 years. There is also a Central subsidy of 3.5 per cent or 4 per cent. If the development plan gets finalised in the next six months, this programme can take off and the poorest can get that kind of housing on ownership or rentals in 5-10 years.