Dream of ‘Housing for All’ might become a reality!

NDA Government started their positive approach towards affordable housing for poor from their Election Manifesto that was released in February, 2014. Through the Manifesto, it was clear that the party was visionary towards Low Cost Housing Programme, ensuring that every family would have a pucca house by the time the nation completes its 75 years (by year 2022) of independence. Also, the proposed programme would further consider provisions of basic facilities along with affordable housing such as toilet, piped water supply and electricity.

Direct Measures

The recent Union Budget 2014 announced a good focus on the issue of affordable housing and has presented a brief action plan to attain the above intentions or declarations from Modi’s Manifesto. There has been a fund allocation of Rs 4,000 crore to National Housing Bank (NHB) to maximise the flow of cheaper credit for affordable housing projects to the urban poor/EWS/LIG segment. Additionally, there has been a fund allocation of Rs 8,000 crore supporting the Rural Housing in the country for the year 2014-2015 and Rs 50,000 crore for Urban Housing.

There was relaxation of FDI norms in the real estate sector reducing the minimum investment limit to $5 million from $10 million earlier. The move is expected to to boost the smaller projects through cheaper capital provisions enhancing the affordable housing projects. Also, there has been relaxation in the size norms for the FDI investments reducing the minimum limit for project from 50,000 sq mts to 20,000 sq mts.

Furthermore, to accelerate the supply of affordable housing there are provisions for the project initiatives undertaken to promote affordable housing by reserving at least 30 per cent of the total project cost for the low cost housing. These projects are provided with exemption of minimum built-up area and capitalisation requirements along with the condition of a three year lock-in period. Slum development through Corporate Social Responsibility (CSR) is also considered under these incentives.

Indirect Measures

Other than direct policies, several indirect policies were also announced in the budget. For instance, increasing the home loan deduction amount for taxation from Rs 1.5 lakh to Rs 2 lakh and the increment of income tax deduction limits under Section 80C from Rs 1 lakh to Rs 1.5 lakh. These measures will promote ownership of houses like never before.

Moreover, following the budget announcement, RBI has also allowed banks to raise the long-term soft funds through market to finance the home buyers with limits set up to Rs 50 lakh for property valued Rs 65 lakh and Rs 40 lakh for property valued at Rs 50 lakh at major six metropolitan centres.

State Government initiatives

Here are few state wise examples of EWS Norms aiming to increase affordable housing in the country.

Delhi Master plan (Housing) : Mandatory provision of EWS housing in all group housing projects with about 15 per cent of the permissible FAR or 35 per cent of the dwelling units (whichever is higher).

Maharashtra State Affordable Housing policy : Reservation of 20 per cent of land for affordable housing (EWS/LIG) in projects over 4,000 sq.m plots.

Karnataka Housing and Habitat Policy (2009) : Reservation of 10-15% per cent land in every new public/private housing project or 20-25 per cent of FAR/ FSI, whichever is greater for EWS/LIG housing.

Uttar Pradesh State Housing Policy (2011) : Provision to reserve 10 per cent each (20 per cent total) of the total saleable units in the project for the EWS/LIG segment.

Gujarat Affordable Housing Policy (2013) : Provision of FSI upto 3 for affordable and free sale category development. Also, upto 10 per cent commercial development allowance and removal of municipal charges for EWS/LIG segment development.

Developers doing their part!

Even private developers are doing their part in the mission Housing For All to build affordable housing projects. One of the prominent realtor in the market, Mahindra Lifespace has proposed to launch 4,500 units of affordable housing by next couple of months targeting the income brackets of Rs 5 lakh to own a house. These units will be launched in the price range of Rs 16-20 lakh in two different cities, Mumbai and Chennai.