Boost for Affordable Housing in Maharashtra
Affordable Housing in Maharashtra is set to receive a major boost by way of several policy decisions. Firstly, the Maharashtra housing authority is planning to raise Rs 1,000 crore as initial corpus for a development fund to support such projects financially. The fund will be managed by a financial institution with adequate experience in housing development financing, and the corpus will be used to lend developers of low-cost and affordable housing projects.
The fund manager, a housing development financing institution, will be selected through a tendering process by the Maharashtra Housing & Area Development Authority (MHADA). This is the first time that MHADA will be raising funds from the financial markets. The state government’s housing body has so far been raising funds only through lotteries for allotment of affordable houses, rents and premium received from developers for transferring housing complexes for redevelopment purpose.
Land Bank for Affordable Housing
In yet another move meant to augment the supply of affordable housing, the Maharashtra government will create a land bank. A proposed housing policy has said that the land from the bank will be used for affordable houses that will automatically control the increasing prices. The government has already announced it would build 11 lakh affordable houses in the next five years and is taking several measures to meet this target.
“It is the government’s duty to make available affordable houses so that their prices remain in control. The government will encourage private developers to come up with new housing stock and also make use of government land like Aarey, CIDCO, MHADA, MMRDA and MIDC for affordable housing,” the housing policy said. The housing department is soon going to put the policy in the public domain before seeking approval from the Cabinet.
The policy has also said that a survey would be conducted within six months to ascertain the status of MHADA land so that a bigger plan for housing can be chalked out. The survey will be sent before the Cabinet for approval and then the houses will be constructed, which will control the prices. “The government departments and offices can also construct affordable houses on their lands or MHADA will take that land according to ready reckoner rates and build houses,” it said.
The policy has also suggested canceling any other reservations on the land in certain cases and using them for housing purposes. The policy has also proposed to use mill lands, defunct factory lands owned by MIDC for the same. “The land bank and its use will be managed by the chief secretary. The land owner department will be taken into consideration before using it for housing purposes. The affordable houses will be built in proportion of 33 per cent each for lowest, lower and middle income groups,” the policy said. The policy also proposes redevelopment of old, dilapidated buildings that will help utilise land in space-starved Mumbai optimally.
Reduction of Stamp Duty on Smaller Houses
There is further relief for home buyers in Mumbai and the rest of Maharashtra as the state government is planning to reduce the stamp duty on residential properties spread over less than 750 sq ft for the economically weaker, lower income and middle income groups.
The stamp duty rates will be rationalised with 1 per cent levy for houses for economically weaker section (EWS), 2 per cent for low income group (LIG) houses, and 3 per cent of the agreement value for middle income group (MIG) houses. Buyers of higher income group (HIG) apartments will continue to pay stamp duty at current rates.
At present, home buyers pay 5 per cent stamp duty on ready reckoner rates -government specified rates -or market rate, whichever is higher. In a far-reaching measure, the policy has also proposed that the stamp duty will be calculated for these segments on the basis of market value at which the transaction is concluded as mentioned in the agreement.
The state government’s draft housing policy, that has proposed these changes, has defined EWS houses as residences spread over up to 269 sq ft, LIG houses spread over 270 to 538 sq ft, MIG houses as 539 to 753 sq ft, while any house spread over more than this area is defined as HIG. Registration charges for these houses will also be lowered to the standard Rs 1,000 per transaction against the current levy of Rs 25,000.
Ready reckoner rates are revised every year based on weighted average of transactions concluded in the year gone by. Earlier this year, the state government had raised these rates by over 30 per cent in most pockets of Mumbai. Areas such as Worli, suburbs, including Goregaon, Borivali, Malad, Chembur, Ghatkopar and Vikhroli, have seen rates go up by as much as 30-40 per cent, and were among the most affected areas.
