The most trending and talked-about affordable housing segment of real estate is now being well received by buyers, developers and various financial institutions. The concept of affordable housing is not new as it has always prevailed in the form of lower income group flats in major cities that have been bringing out extensive employment opportunities. However, the initiatives by private developers for the same came into view in the past 4 years due to various encouraging schemes by the Government of India and slowdown in the sales of mid-segment and upper-segment homes. Various factors like rapid urbanization and increased trend of nuclear families led to the high demand for these low-cost projects.
During 2014 itself, finance minister Arun Jaitley finally showcased major initiatives for the affordable housing segment and assigned Rs 4,000 crore. up from Rs 2,000 crore in 2013. to the National Housing Bank (NHB) in order to give credit to housing finance companies to provide requirements for the urban poor. The government simplified norms for the Foreign Direct Investment, including the revised definition of the affordable housing project. This was done to spur the foreign investment in the housing sector. Also, an announcement from the RBIallowed banks to raise long-term soft funds from the market to finance soft lending for home buyers for up to Rs 50 lakh for property values of up to Rs 65 lakh in the six metropolitan centers: Delhi, Mumbai, Kolkata, Chennai, Bangalore, and Hyderabad. The RBI made it clear that it would also keep a check on the definition of affordable housing.
The year 2015 was another year that focused on boosting the affordable housing implementation. The government realized that an estimated investment of $1.7 trillion was required to meet the housing shortage. The Union Cabinet approved construction of 2 crore houses for the urban poor in all the 4,041 statutory towns and cities of the country. Around 305 cities and towns were identified for building houses for urban poor under the Housing for All schemes. 989 cities and towns in 20 states were identified for affordable housing projects. These initiatives by the government were followed by the signing the MOA by 15 states with the Center agreeing to implement reforms ensuring support to the scheme. Meanwhile, Smart City, AMRUT and other housing missions were all welcomed by the government. Due to the government schemes for housing, various states turned up with the layout plan for affordable housing projects.
The Ministry of HUPA cleared housing schemes for 145 cities in West Bengal, MP, Jharkhand, Odisha, Mizoram, Gujarat, Tamil Nadu, and Telangana. Also, the Cabinet approved the Real Estate (Regulation and Development) Bill, 2016. However, the delay in various affordable housing projects around the nation gave the government a hard time as they became skeptical about the execution of low-cost housing scheme before the deadline.
The Pradhan Mantri Awas Yojana (PMAY) introduced in June 2016 came up with an assurance of quick execution. It introduced projects fitted with solar energy panels at a cost of Rs 253 crore under the scheme in Tamil Nadu. The government sanctioned 81,757 houses for urban poor in 7 states with an investment of Rs.4,076 cr. The Lok Sabha also cleared the Real Estate Bill that was dedicated to bringing the transparency into the real estate sector. The budget also announced several other benefits for the affordable housing segment during the same year.
The year 2017 gave a head start to the newly enacted laws and amendments like the RERA and GST. The Real Estate (Regulation & Development) Act came into action on 1 May 2017. This amendment came into force to ensure transparency in the real estate sector. The ministry of housing and urban poverty alleviation had initially prepared the framework paper on lawfully handling the real estate sector. Model law was then prepared for legislation by states and Union Territories in May 2008. This Act will ask developers to update information about their ongoing and under construction projects on the RERA website. Projects that have not received the completion certificate or are not registered with the regulatory bodies till the end of July would be under the radar.
GST, on the other hand, made the taxation process easier and transparent. According to the industry experts, this amendment in the taxation procedures would give a boost to the affordable housing projects as well. Though there wouldn’t be a direct impact on the affordable housing segment, but transparency about the unscrupulous transactions and the concept of rationalized taxes would attract more home buyers. Financial institutions have taken various initiatives in the form of interest reduction on home loans, that are paving way for the aspirants striving to buy their first home. The enactment of GST has not only made the taxation process easier but has also introduced transparency. These enactments are altogether fostering the market and also encouraging people to invest.
(The author is Mr. Gaurav Gupta General Secretary CREDAI-Ghaziabad & Director, SG Estates)
Source - Financial Express