In a move to give affordable housing a further boost, Finance Minister Arun Jaitley in his Budget speech proposed to give ‘infrastructure’ status to this segment.
‘Infrastructure’ status for affordable housing, in fact, has been a long-pending demand of the real estate sector. Therefore, “granting infrastructure status to affordable housing will provide a boost in volume of construction activity across the country. A good boost to the construction industry that was struggling with reduced number of product launches in real estate in the last couple of years,” said Joe Verghese, Managing Director, Colliers International India.
“The announcement of affordable housing being given infrastructure status is a welcome move and will act as a catalyst to meet the objectives of Housing to All by 2022. Credit offtake towards affordable segment of housing will lead to creation of supply specially for both stake holders – the first home buyer and developer — who will now have access to cheaper funding. The Govt. will redefine ‘affordable housing’ – this is very much required, as we expect the Govt. to make a deliberate decision on defining affordable housing keeping in view the differentiation between Tier 1, 2 and 3 locations / cities across the Indian geographies,” said Ravi Ahuja, Executive Director, Office Services & Investment Sales at Colliers International India.
It may be noted that the Modi government has taken several steps to boost affordable housing since coming to power. The ‘Housing for All by 2022’ scheme and other sops like theinterest subsidy scheme under the Pradhan Mantri Awas Yojana (PMAY) are some of such initiatives. The government’s focus on affordable housing has also helped in making the term more acceptable to developers, who are now not only entering this segment with confidence but also talking about it openly. There is now considerable goodwill attached to such a move, and affordable housing obviously makes eminent business sense.
Industry experts, however, believe that although the government’s move is commendable and some policy changes have also been made to give a push to the sector, still that is not enough and lots more remains to be done to make housing affordable in its true sense.
Keeping this in view, real estate developers were expected more sops in the budget to boost affordable housing.
“The avowed aim of the Modi government’s ‘Housing for All by 2022’ scheme is to deploy 2 crore homes in Indian cities within that timeframe. But to achieve this, the government needs to introduce a fast-tracked approval process for such housing projects, provide suitable financial empowerment to EWS-category buyers, and unlock government-held land parcels on which such affordable housing can be built,” said Anuj Puri, chairman & country head of JLL India, talking about the budget.
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There is also need to involve the private sector in a big way for meeting the target of the scheme, said experts.
Similarly, the government had recently announced that interest subsidy of 3% would be applicable on loans of up to Rs 12 lakh and 4% on loans of up to Rs 9 lakh, under the Pradhan Mantri Awas Yojana (PMAY). Now that two new income categories can avail higher loans with interest subsidies, the sector expected some more clarity on actual definition of beneficiaries who can avail of these benefits.
So, would young urban professionals hoping to buy their own apartments but not belonging to either the EWS (Economically Weaker Section) or the LIG (Low Income Group) segments be allowed similar subventions? Also, “affordable housing is largely available in the fringe areas of metros and tier-II, III cities. So, would certain redevelopment projects within the metropolitan city limits – and meeting the affordable housing definition – be granted similar benefits?” asked Puri.
HDFC Bank, on the other hand, expected likely expansion of the Pradhan Mantri Awas Yojana and inclusion of people having higher incomes (~Rs 12-18 lakh/year) under the interest subvention scheme. It also expected introduction of a new scheme that may use money from the demonetisation drive – lower interest rate in the range of 6-7% for home loans up to Rs 50 lakh (to first time borrowers).