How to make the most of the affordable housing boost
To get subsidy under Pradhan Mantri Awas Yojana (Urban), the carpet area has been increased by 33%. Experts share how affordable housing can be made more attractive:
ROPE IN PRIVATE SECTOR UNDER PPP
The initiative, ‘Housing for All by 2022’ is the central pivot around which the government’s efforts are concentrated.
This, in turn, covers different aspects like rental and affordable housing.
Roping in the private sector under the Public-Private Partnership (PPP) model is the key to improving the segment.
Among other initiatives, the government needs to grant infrastructure status to the entire real-estate industry making longterm financing easy for the industry; fix GST rate for all types of housing at 6%; revise carpet area to 60 sq mt including in metro cities to qualify for subsidy; make land available at subsidised rates; reduce premium on additional floor space index (FSI) to encourage affordable housing in metro cities and also reduce time taken and cost of permissions and clearances.
To make affordable housing happen, we need to work on the mass housing model, bringing economies of scale into the picture.
Niranjan Hiranandani, president (national), NAREDCO and CMD, Hiranandani Communities
PERMIT HIGHER FLOOR SPACE INDEX
Land in metros forms a significant proportion of the project cost and renders such projects unviable for the affordable segment. Policies should be formulated wherein land can be provided at rates that make projects viable.
Land can be provided to develop composite projects where one segment, say, the lower income group is cross subsidised by the revenues earned from the other segment say higher income group. Significant land banks across regions can be identified by agencies. If such corridors allow for high density development, a higher FSI can be permitted, with an incremental benefit of FSI being applied towards affordable housing. The government should provide incentives to private players who use technology to deliver quality product.
Shubham Jain, sector head corporate sector ratings, ICRA
REWARD DEVELOPERS FOR LAST MILE CONNECT
Availability of land in cities at affordable pricing is one of the major challenges. The government could facilitate the development of affordable housing by making surplus land held by PSUs (Public Sector Undertakings) available for affordable housing projects. Land is a state subject which adds a layer of complexity. The central government should guide the states on programmes to allocate and incentivise the use of land for affordable housing, while also incentivising state governments to facilitate engagement and implementation.
Developers should get incentives for infrastructure and lastmile connectivity development in semi-urban centres. It can be through an increase in FSI or reducing stamp duty or tax Infrastructure upgrading precedes the FSI increase to ensure that existing households are not adversely impacted due to the new development.
Joe Verghese, managing director, Colliers International India
ALLOT LAND PARCELS AT SUBSIDISED COSTS
We believe the recent move to raise the carpet area and the RBI’s revision of housing loan limits for priority sector lending (PSL) eligibility will help bring most of the under-construction dwelling units in urban India under the purview of the CLSS.
Most of the impact is likely to be felt in the peripheral locations of Tier I, II and III cities, where the size of units are larger. This will not only bolster homebuyer sentiments, but also further propel construction activity in the affordable housing sector.
However, the next steps for the government should be to look at the benefits for developers. Elements like reduction in construction inputs should now be a priority.To make optimum use of the initiative, the land allotment should be at better locations and subsidised costs. Focus should be on building a holistic environment that incorporates infrastructure and social facilities.
Anshuman Magazine, chairman, India and South East Asia CBRE