Policy amendments must to promote affordable housing
Delhi: With urbanisation expected to grow at a compounded annual growth rate of more than two percent over the next 20 years, there is a great need to develop better policies to provide mass housing, particularly in the suburbs and satellite towns of metros and Tier I cities.
The government has to reform the development norms as most of the existing ones are obsolete. Increasing floor area ratio (FAR), encouraging the public-private partnership route, speeding up the launch of real estate investment trusts or listed companies that own and manage property on behalf of shareholders, and many other measures have to be followed in order to meet the large-scale fund requirement for mass housing.
On a move to promote affordable housing, National Housing Bank (NHB) is setting up an urban housing fund with 2,000 crore ($360 million). The Housing and Urban Development Corporation too has set a target to build 500,000 affordable homes and in its first tranche, has raised about 2,200 crore ($400 million).
Both these funds will work as a “pool fund” to incentivize cash-strapped developers aspiring to tap the high potential segment of affordable housing.
There are no effective initiatives in the policies for affordable housing segment. This year’s budget sop of 100,000 ($1,800) additional tax benefit on home loans will largely benefit tier II and tier III cities. Launching incentivized policies for developers to provide mass housing in the suburbs and satellite towns of metros and Tier I cities would be of great benefit to the affordable housing sector.
Also, tax exemption for low-income houses up to 60 square metre carpet area and extension of tax holidays for low-income housing under Sec 80 1B of the Income Tax Act could prove beneficial.
Moreover, there is an urgent need to regulate the rates of home loans. A parliamentary panel on the finance has sought a cap and regulation on interest charged by housing finance companies. Increased home loan limit for affordable residential units in the metros and tier I cities from 2.5 million to 3.5 million may encourage developers and home-buyers on a long run, which would further increase both demand and supply of mass housing.
At present, several realtors and private equity players have shown interest in affordable housing sector, which would result in increased traction on this segment of the real estate industry in the days to come.
Click here for related forum discussion
Related Real Estate News:
Developers stand against Haryana’s draft realty Bill
Realtors develop smaller apartments to drive house sales
Delhi: Property rental up by 20 percent
Affordable homes, affordable housing policy, affordable housing project, Affordable housing schemes, affordable residential units, development norms, FAR, Floor Area Ratio, Home loans, Housing and Urban Development Corporation, Housing finance companies, low-income houses, low-income housing, Mass housing, National Housing Bank, NHB, Public-private partnership, Real estate investment, satellite towns of metros, Tax benefit on home loan, Urban Housing Fund, urbanisation
