April 18, 2013
The country is struggling with an acute
housing shortage, and the shortfall is enormous in the affordable and
low-cost housing segment, according to a recent report by the Ministry
of Housing and Poverty Alleviation (MoHUPA).
But despite the government’s continued encouragement to low-cost housing projects, nothing substantial has come up so far, due to a lack of proper policy framework, opine the experts.
The MoHUPA report states that for the 12th five year plan (2012-17), 10.55 million houses are urgently required in EWS category and 7.41 million in LIG category. To promote the development of low cost housing, various state governments have come forward and announced several projects in their respective states recently.
For example, recently the UP government has announced two new affordable housing projects for Noida and Greater Noida. And moreover, it has already approved a residential project for the Greater Noida Authority that will build 7,200 affordable flats in ground-plus-three format in Sector 10.
On the other hand, the Gujarat government also has plans to build 120,000 homes in the affordable segment for the year 2013-14. Similarly, the Odisha government is also planning to build 5000 housing units, to meet the growing demand for affordable housing, and similarly various other states are also in the process of coming up with similar projects.
But, given the slow pace of these initiatives and without due participation from the private real estate players, meeting this huge target in the given timeline seems to be a distant dream. The government is urgently required to encourage all the developers with favourable policies, so that they can venture into affordable and low-cost housing projects in a big way.
“Looking at this scenario, the government should immediately act and grant different kinds of sops to promote affordable housings in the country. Housing is an urgent need of the common man, and for the welfare of the masses, nothing is more important than providing a roof over every head,” says R G Gupta, a leading city/policy planner and ex –advisor, NCR Planning Board & ex-planner-DDA.
“The widening gap between supply and demand in the affordable housing segment highlights the need for effective and focused efforts towards bridging the same. The Government needs to look into providing additional fiscal incentives such as tax concessions on building materials, technology and services to decrease construction costs, and provide more income tax relief to buyers of affordable housing units,” affirms Sanjay Dutt, Executive Managing Director – South Asia, Cushman & Wakefield
Moreover, Gupta also strongly pitches for granting infrastructure status to affordable housing, so that loans for affordable and low cost housing projects will be easily available to the developers.
The recent move by RBI to allow External Commercial Borrowing (ECBs) up to $1 billion for low-cost affordable housing projects, is expected to boost affordable housing scenario. Also, according to Ministry of Housing and Poverty Alleviation, the government is planning to allow more FDI in the affordable housing segment.
In order to boost the affordable housing segment, recently the government has also announced the CRGF – a scheme for low-income housing and a trust of Rs 1,000 crores through which the government can provide credit risk guarantee to lending institution against housing loans of up to Rs 5 lakh for borrowers falling under the EWS/LIG categories.
Moreover, in order to promote low cost housing and increase private sector participation into it, the experts opine that the provision of single window clearance system for project approvals should immediately be in place. It is since delay in getting different approvals always increases the project construction cost. Also, lesser FSI is another deterrent in this direction.
“The government should allow some extra FSI at the land for the development of affordable and low-cost housing,” says Jogy P Thomas, Deputy CEO, ATS Infrastructure.
In a recent development, the Wave group has recently announced a low-cost housing project at Ghaziabad. The company would be investing over Rs 500 crore to develop low-cost apartments of Rs 14-18 lakh in Ghaziabad. According to Rajendra Kumar Panpalia, MD, Wave Group, the demand of affordable homes is set to rise following the recent Budget announcement of increasing tax exemption on home loans up to Rs 25 lakh for the first home buyers to Rs 2.5 from Rs 1.5 lakh.
The requirement of 10.55 million houses in low cost housing segment has thrown open floodgates of opportunity for real estate developers, pan India.
But despite the government’s continued encouragement to low-cost housing projects, nothing substantial has come up so far, due to a lack of proper policy framework, opine the experts.
The MoHUPA report states that for the 12th five year plan (2012-17), 10.55 million houses are urgently required in EWS category and 7.41 million in LIG category. To promote the development of low cost housing, various state governments have come forward and announced several projects in their respective states recently.
For example, recently the UP government has announced two new affordable housing projects for Noida and Greater Noida. And moreover, it has already approved a residential project for the Greater Noida Authority that will build 7,200 affordable flats in ground-plus-three format in Sector 10.
On the other hand, the Gujarat government also has plans to build 120,000 homes in the affordable segment for the year 2013-14. Similarly, the Odisha government is also planning to build 5000 housing units, to meet the growing demand for affordable housing, and similarly various other states are also in the process of coming up with similar projects.
But, given the slow pace of these initiatives and without due participation from the private real estate players, meeting this huge target in the given timeline seems to be a distant dream. The government is urgently required to encourage all the developers with favourable policies, so that they can venture into affordable and low-cost housing projects in a big way.
“Looking at this scenario, the government should immediately act and grant different kinds of sops to promote affordable housings in the country. Housing is an urgent need of the common man, and for the welfare of the masses, nothing is more important than providing a roof over every head,” says R G Gupta, a leading city/policy planner and ex –advisor, NCR Planning Board & ex-planner-DDA.
“The widening gap between supply and demand in the affordable housing segment highlights the need for effective and focused efforts towards bridging the same. The Government needs to look into providing additional fiscal incentives such as tax concessions on building materials, technology and services to decrease construction costs, and provide more income tax relief to buyers of affordable housing units,” affirms Sanjay Dutt, Executive Managing Director – South Asia, Cushman & Wakefield
Moreover, Gupta also strongly pitches for granting infrastructure status to affordable housing, so that loans for affordable and low cost housing projects will be easily available to the developers.
The recent move by RBI to allow External Commercial Borrowing (ECBs) up to $1 billion for low-cost affordable housing projects, is expected to boost affordable housing scenario. Also, according to Ministry of Housing and Poverty Alleviation, the government is planning to allow more FDI in the affordable housing segment.
In order to boost the affordable housing segment, recently the government has also announced the CRGF – a scheme for low-income housing and a trust of Rs 1,000 crores through which the government can provide credit risk guarantee to lending institution against housing loans of up to Rs 5 lakh for borrowers falling under the EWS/LIG categories.
Moreover, in order to promote low cost housing and increase private sector participation into it, the experts opine that the provision of single window clearance system for project approvals should immediately be in place. It is since delay in getting different approvals always increases the project construction cost. Also, lesser FSI is another deterrent in this direction.
“The government should allow some extra FSI at the land for the development of affordable and low-cost housing,” says Jogy P Thomas, Deputy CEO, ATS Infrastructure.
In a recent development, the Wave group has recently announced a low-cost housing project at Ghaziabad. The company would be investing over Rs 500 crore to develop low-cost apartments of Rs 14-18 lakh in Ghaziabad. According to Rajendra Kumar Panpalia, MD, Wave Group, the demand of affordable homes is set to rise following the recent Budget announcement of increasing tax exemption on home loans up to Rs 25 lakh for the first home buyers to Rs 2.5 from Rs 1.5 lakh.
The requirement of 10.55 million houses in low cost housing segment has thrown open floodgates of opportunity for real estate developers, pan India.
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