1. Here’s how Delhi’s land pooling policy will boost affordable housing, create more jobs

Here’s how Delhi’s land pooling policy will boost affordable housing, create more jobs

The biggest advantage perceived from this proposed development is availability of land parcels for affordable housing projects.

Published: June 7, 2017 1:29 PM
China property, investment rises, sales,  property investment,  National Bureau of Statistics, China The land pooling policy has already been notified in year 2013.

By Amit Chawla

In a bid to make housing more affordable, the Delhi government has recently announced 89 villages as urban areas which will help the authorities to develop infrastructure projects in the localities. The policy was pending for two years and will now allow DDA to develop public infrastructure like roads on the pooled land and return a substantial portion of the plot to the owner. As per the land pooling policy, the small land parcels owned by various individuals will be assembled to form a big land area to develop a new town/city as per the regulation formats. Post development of the land, the land pooling agency redistributes the land after deducting some portion towards infrastructure development. This is done to develop and bring out the potential of housing and infrastructure, thus reducing the load on the existing congested and saturated cities.

The land pooling policy has already been notified in year 2013 and regulations for executing the policy has been finalized for consideration and approval by the government of India.

Simultaneously, government of NCT, Delhi has already approved one-stage stamp duty exemption, and currently Lieutenant Governor of Delhi has paved the way by notifying 89 rural villages as urban areas which is a welcome and positive move. The following are the advantages to the said policy:

1. The land owners who contribute towards land pooling though get lesser land area in return but get well laid out infrastructure and amenities required for development, thus increasing the marketability of the parcel.

2. It will increase employment opportunities for various sections of skilled and semi/unskilled labour force required for development of the area.

3. Many financial institutions will be attracted for financial support in development of various asset classes.

4. Many new companies and business operators will be attracted towards new developments.

5. End-users as well as investors in the residential asset class will be keen in exploring projects in these locations due to price arbitrage and spread of payments in future.

With these set of advantages, there are certain set of challenges which needs to be addressed to smoothen the implementation of the said policy:

1. There are many government bodies involved for the said development like DDA, MoUD and Delhi government departments which need to align within themselves for effective implementation.

2. The land acquisition should be undertaken as per the new guidelines which is an elaborated process and requires lot of approvals.

3. As land pooling policy is a framework and land surrendering is voluntary, therefore, practically it will be very difficult to accumulate large contiguous parcels within stipulated timelines.

4. The minimum land area is 5 acres which can be part of the pool. In this particular case, a lot of smaller land holdings will not get eligible and might hit the contiguity of the proposed development.

5. The land allocation process can be challenging in terms of land parcels preferences by various stakeholders as they can be allotted land within 5 kms radius of their current land holdings.

6. There is a cost associated with external development charges which land owners will have to pay to the government along with land pooling. In case they are not able to pay these charges, the government will compensate the same by giving lesser proportion of the net area to the owners.

The biggest advantage perceived from this proposed development is availability of land parcels for affordable housing projects. Currently, there are very less land available in the existing cities and are at the price which does not meet the financial requirements of an affordable housing project. With new proposed urban centers near the existing cities, there will be higher attractiveness and feasibility for development of affordable housing projects. Also, the end-users will be attracted towards these locations due to following factors:

1. Availability of affordable housing in the commutable distance of their employment locations;

2. Accessibility to basis level of physical and social infrastructure;

3. The new projects will be regulated under RERA which will provide ensure project delivery as per the timeline.

Overall, with the increase in urbanisation rate leading to requirement of new cities, land pooling is a much-needed move. However, the benefits can only be ascertained by the smooth and timely execution of the policy.

(The author is Associate Director, Valuation & Advisory Services, Colliers International India)

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