Developing Affordable & Sustainable Habitats
The provision of affordable housing at scale remains a challenge. Unaffordable cost of homes coupled with unfavorable regulatory environment for developers has led to a large chunk of the society devoid of roof over their head. Sapna Srivastava delves deeper into the subject.
After 70 years of Independence, India is still struggling to address the challenge of providing shelter without any concrete solutions on the horizon. A recent FICCI- CBRE whitepaper on Affordable Housing highlights that the segment hasn’t really gained the required momentum majorly because of the sluggish private participation in building affordable housing projects.
Design & Development Challenges
In an earlier conversation architect Hafeez Contractor, Founder-Principal Architect – Architect Hafeez Contractor (AHC) had rightly pointed out that to provide affordable housing to 70 per cent of the population of the country. “Housing for All scheme” had to be implemented by planning the cities not for today but next 50 years. “I advocate the vertical growth of cities, judicious land use and the need for sustainable & compact cities to maintain a perfect harmony between increasing population and limited land resources,” he said.
Expressing the similar view, architect Bobby Mukherjee Founder & Principal Architect Bobby Mukherji & Associates had vociferously emphasized in his interview, “It is the architect’s prerogative to use design as a tool to give optimum housing unit within a given budget. Likewise, there is a need for developers to invest in innovative construction technologies in mass housing developments for subsidized costs.” Also read TushadDubash – Director, Duville Estates, shares his proficient opinion with Realty Plus
Another key aspect that merits discussion is the post occupancy maintenance. Such consideration is absent under PMAY and in Rajiv Awas Yojana (RAY), an O&M fund for maintenance of assets created under the scheme with a onetime contribution from the central government could not be implemented at a wider level. This eventually leads to slum like conditions and defeats the purpose of creating sustainable quality housing.
According to Delhi-NCR based Pradeep Aggarwal, Co-founder & Chairman, Signature Global the biggest challenge to create affordable housing is the unlocking of land in urban areas. “Adequate land is to be made available to make a dream come true of creating 2 crore homes. This will require unlocking non-essential lands currently being held by large government bodies.”
“Easier conversion of land use from Industrial and Agriculture to housing and the floating FSI concept must be allowed for affordable housing.” said Kolkata based Pradip Kumar Chopra Chairman & Managing Director – PS Group.
“The PMAY scheme is conceptually the right model to unlock land in areas in and around the metros as it allows a higher FSI in both green zone and R zone lands with some caveats, such as 50% of the units being sold as per RRR to eligible first time home buyers, ” insisted Rohit Poddar, Managing Director Poddar Housing and Development Ltd from Mumbai.
Finance is one of the challenges for a EWS category buyer due to lack of credit history or relevant income documents. Government needs to improve the micro finance environment and incentivize housing finance companies to lend to low income individuals.
“If low income individuals get access to easier source of home finance from HFC’s it will lead to promotion of commerce for builders who will be able to cater to these people as well as providing a proper residence to them who would have had to otherwise live in unsavory and unsanitary circumstances,” said Chopra.
Poddar talking about the challenges for EWS customers said, “They mostly work in the informal sector, make decent monthly income but they hardly have any sort of savings to make the down payment for homes. Without financial support and availability of home loans, the EWS category of customers simply cannot even consider buying their own home.”
Aggarwal briefed on his own initiative, “Signature Global housing finance business line, assists clients in developing affordable housing finance markets for lower & informal and middle-income households. It helps in maintaining overall financial stability and addresses the issue of urban poverty.”
Vinay Sah Managing Director & CEO, LIC Housing Finance Ltd in his interview had contended that the First Time Buyers are the biggest beneficiaries due to the subsidy through PMAY-CLSS scheme. “Affordable housing is already having a significant contribution in our business and LIC HFL through its extensive network will continue to develop deep collaboration with developers.”
Amit Wadhwani, Founder Director, Sai Estate Consultants, Mumbai however, expressed, “Owning a house is a challenge for most of the home buyers mainly in the metro cities of India, considering a lot of people fall under the low-income bracket. He said, “We are currently collaborating with many projects that fall in the affordable housing segment across cities and in coming years we see at least a 30 percent hike in the affordable houses segment as compared to the other segments in real estate.”
Some experts are of the view that the present NBFC crisis impact will make home loans harder to get and the biggest segment to suffer would be the low income individuals. Conversely, the developers too are finding it hard to avail funds even for affordable housing despite the infrastructure status.
Agarwal agreed, “Despite being accorded infrastructure status by the government, affordable housing projects are likely to suffer due to the ongoing NBFC crisis. However, talking about Signature Global, the crisis does not have any major effect on us as most of our projects are self-funded. Chopra countered that given the LIG & MIG buyers are mostly salaried class with a stable income, the banking crisis will not affect affordable segment In fact, and banks are becoming more aggressive by giving better interest rates for home loans.” Feeling positive Poddar stated, “The liquidity matters should get resolved probably between January and March 2019. In the interim there is definitely pain as new proposals are in cold storage and even approved construction loans and home loans are seeing delayed disbursements.” Also read http://realtyplusmag.com/developers-tapping-warehousing-demand/
Government Initiatives & Interventions
“With ‘Affordable Housing Policy’ and ‘Deen Dayal Jan Awas Yojna’ that focuses on the plotted development, the Haryana Government is providing a full-fledged support to PMAY mission. Additionally policies that ease the business will encourage more developers to step into the affordable housing segment. The fast track clearances or a single window clearance would be beneficial for homebuyers as well as developers,” said Agarwal
“West Bengal government under the CLSS Scheme of PMAY gives interest subsidy as high as 6.5% to EWS based on loan amount and carpet area. The current Affordable Housing scheme expiring in 2019 should be extended for another 2 years so that builders can bring more projects under this segment. Secondly, the 60 sqm limit should be increased to 90sqm in metro cities, HIRA norms should be relaxed specific to projects under affordable housing as such projects are tight on cash flow and lastly, lower interest rates on project loans taken by builders will support expansive construction,” stated Chopra
Poddar being supportive of Maharashtra government initiatives added, “A lot of assistance is already being given under the PMAY scheme like a 2.5 lakhs incentive for the developer per EWS tenement and up to 2.69 lakhs CLSS to the customer. Other than a little bit of tweaking of the PMAY scheme, nothing much is required.”