Expensive land, high financing costs, and multiple approvals is keeping many real estate players away from affordable housing projects.
Pranav Ansal, Vice-Chairman, Ansal Properties and Infrastructure Ltd, said that meeting the target of Government’s ambitious scheme ‘Housing for all by 2022’ is be close to impossible, despite the positive sentiment in the industry after the BJP came to power.
Ansal added that no big developer enters affordable housing sector due to high land costs. “We have no plans of doing it unless the Government changes some bylaws or gives some benefit such as higher floor area ratio (FAR),” he said.
According to Government estimates, the housing shortage in India is close to 18.78 million, 97 per cent of this is in the economically weaker section and low income group.
Urban Development Minister M Venkaiah Naidu has maintained that the Government is banking on private participation and an interest subvention plan would be announced soon with the new housing mission.
But, real estate players say that interest cost is only part of the problem. Raj Gehlot, Chairman, Ambience Group, said, “FAR needs to be hiked and infrastructure needs to be in place to accommodate higher FAR.”
A recent Cushman & Wakefield study revealed launches in affordable housing segment dropped by 52 per cent in eight cities in third quarter of 2014 as against the corresponding period last year.Taxation
Rohit Raj Modi, President, CREDAI- NCR, said, “The Government needs to address the double taxation on land component, as stamp duty is paid by the developer when he purchases the land and also by end buyer. In order to make affordable housing lucrative for developers, the state needs to give VAT waiver and Centre needs to reduce the excise duty.” He added that a multi-agency committee should be formed to provide single-window clearance. Builders argue that apartment costs can be reduced if the time taken to get licenses can be brought down. On an average it takes 1-2 years to get all clearances for a housing project.
Some States such as Haryana have taken steps to make affordable housing possible through the Affordable Housing Policy, 2013, which has received several applications. Under this policy, Supertech will be offering houses between ₹12 lakh and ₹20 lakh, while Raheja Developers unveiled a project in Sohna offering 1,660 apartments priced at ₹3,600 per sq ft.
Tata Housing too is developing townships under the brand Tata Value Homes which offers affordable housing in Boisar, Vasind, Ahmedabad, and Bengaluru. Brotin Banerjee, MD & CEO, Tata Housing Development Company, expects the demand for affordable housing to increase by 20 per cent per annum at least for the next decade.
“The Government has already relaxed FDI norms in construction which will help in project financing. The sector now requires introduction of key reforms and streamlining of the regulatory approval process,” he said.
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