Transparency and timely approvals can reduce home prices by 20% – Deepak Parekh
The Chairman of home loan major HDFC Deepak Parekh mentioned that transparency and timely approvals from different authorities can reduce home prices by almost 20 %. Now that is truly a good news for the home buyers. And the Modi government had promised to reduce the red- tapism involved in the housing projects.
Parekh also mentioned that the banks and housing finance companies should be allowed to fund land transactions. The land transactions costs comprise almost 70-80 % of the total cost and the bank funding will ease the pressure on the developers. Regulators prohibit banks and housing finance companies from extending finance to private developers to acquire land. Developers have to then arrange for these funds from non-banking financial institutions and even from informal sector often paying exorbitant interest rates ranging between 18-22 % per annum. This increases the cost of the property which is passed on to the buyers.
He also put forward the demand that the threshold limit for priority sector housing loans should be increased to at least Rs 40 lakh per unit, from the current “unrealistic” level of up to Rs 25 lakh.
Presently the trend is that the developers are interested only in luxury projects as the profit margins are good. However if an online, single window clearance mechanism is put in place, then the affordable housing projects will bring good returns as delays caused due to red tapism increases the cost of any property.
Source- The Financial Express
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