Personal Finance

AP developers in a bind

V. Rishikumar | Updated on February 19, 2011

Andhra Pradesh wants to be slum-free by 2014.   -  Business Line

The Andhra Pradesh Department of Municipal Administration and Urban Development recently approved a State policy framework which seeks to make the State a slum-free State.

In return for allocating part of the project to poor sections in housing projects, the State will offer developers concessions, including waiver of stamp duty and non-agriculture land conversion charges.

The focus of the policy is a slum-free State by 2014 by bringing about changes in the way urban housing projects are approved and developed. This policy works in consonance with the Central Government Rajiv Awas Yojana (RAY) for slum dwellers and urban poor.

As a part of the larger policy initiatives, the Central Government extends support, including financial, under Jawaharlal Nehru National Urban Renewal Mission to the States willing to assign property rights to people living in slum area to create a slum-free India in five years.

Following detailed deliberations on the Rajiv Awas Yojana initiative , the State Government has constituted State-level and departmental committees to suggest changes required in the legal framework to facilitate the implementation of RAY.

The departmental committee proposes to amend laws to reserve 15 per cent of developed land or 25 per cent of the floor area ratio in new housing or integrated development projects, to be allotted to the urban poor.

This is aimed to make this land available for poor in future and also prevent slum formation.

The Secretary Municipal Administration, Ms Pushpa Subrahmanyam, in a recent order outlined the Government thinking and expects the departmental committee to submit its report within a month outlining some modalities.

Developers in a bind

The mandatory quota in built-up space in layouts of developed lands for group housing projects being taken up in 4,000 sq.yards for Hyderabad and for other areas has the real estate developers in a bind.

The proposals also allow the developer to mortgage 10 per cent of layout space and five per cent of built-up space for urban poor as a security deposit. This is aimed at ensuring that the rules are adhered to.

As a trade-off, the State Government will offer 100 per cent exemption of stamp duty, non-agricultural conversion charges and development charges.The State Government is under pressure from the developers to dilute the approach amid the general thinking that it will be not feasible to house both the rich and the poor together in the same facility.

Some are concerned about how this would be implemented. There is lack of clarity on pricing , both with regard to land, built-up area and thereafter the impact of regulation.

The entire concept seems to be appealing from a macro perspective. But when it comes to implementation, there could be challenges.

The banks and financial institutions who fund for the projects need to be consulted before this is finally implemented, say developers.

Published on February 19, 2011

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