Bribery overrides affordable housing in India
While the government of India forcing leading real estate developers to cater to the needs of buyers of economically weaker section (EWS) through developing affordable housing projects, the developers are concerned about the loss of incentives for being in the business of building affordable houses.
Developers claim that there is no difference in the amount of paperwork involved in the affordable and premium housing projects. To get the paperwork done, developers end up paying bribes which subsequently curbs their profits from affordable projects. Adding to this are other reasons such as lesser funds, land scarcity and rising construction costs.
Shri Ajay Maken, new Minister for Housing and Urban Poverty, has directed that private builders should develop at least 35 percent of housing units in any real estate project – or 15 percent of the floor area ratio – for the EWS category.
However, it has to be noted that the main reason for disinterest among builders is the government’s current rules and operating environment. Which builder would like to choose a project that yields low-margin profit instead of a high-margin one?
As an outcome, several developers have been developing affordable projects with a price tag ranging between Rs 15 lakh to Rs 40 lakh, which is no more affordable to the low-income group.
Since the investors are many, the prices are increased and the actual investors are being blocked out. This deviates the entire concept of affordable housing, alleged Subhankar Mitra, head, strategic consulting (west), Jones Lang LaSalle India.
Affordable houses, Affordable Housing, affordable projects, Bribe, Economically Weaker Section (EWS), Floor Area Ratio, Government, Government of India, Jones Lang LaSalle India, land scarcity, lesser funds, Low-income group, Minister for Housing and Urban Poverty, paperwork, premium housing projects, Real Estate Developers, real estate project, Rising construction costs, Shri Ajay Maken
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