Maharashtra may miss affordable housing target
3 min read 27 Sep 2016, 12:09 AM ISTLack of land, poor infrastructure and red tape stand in the way of government's plan to build 650,000 affordable houses by 2022
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Mumbai: The Maharashtra government is unlikely to meet its target of 650,000 affordable houses by 2022, say developers and real estate advisers. They cite lack of land, poor infrastructure and delays in regulatory approvals as the reasons for this.
Last year, the state government announced affordable housing plans in 51 cities including Mumbai, Navi Mumbai and Thane as part of the centre’s Housing for All programme.
It set a target of building 1.9 million affordable houses by 2022, but later scaled it down to 650,000.
That’s a much more realistic target, although still difficult to achieve, said a senior official in the state’s housing department.
This person echoes the same reason proffered by developers—not enough land, especially in contiguous blocks, to allow construction of such scale.
There are other issues as well, according to Niranjan Hiranandani, chairman and managing director, Hiranandani Communities, and the president of the National Real Estate Development Council. These include: challenges in acquiring land, zoning laws, limiting floor space index (FSI) guidelines which dictate the area a building can occupy on a plot of land, high levies , the lack of a so-called single-window clearance and red tape.
According to the Reserve Bank of India, affordable houses are units up to 60 sq. m and a price of up to Rs30 lakh. Loan for buying such houses is capped at Rs25 lakh.
The housing department official admitted that the time taken to clear a project varies across cities.
In January, the Brihanmumbai Municipal Corporation (BMC), the governing body of Greater Mumbai, cut the number of building permissions from 119 to 58 in order to boost affordable housing schemes. The BMC has also slashed the time for clearing a building project.
“The revision in the construction permit regime is aimed at releasing land to the developers and issue them all clearances in less than one year. But not many affordable housing schemes have actually benefited from this change because most of the projects are located outside BMC limits," said a BMC official on condition of anonymity. He added that the municipal authorities in other cities such as Thane and Navi Mumbai have to carry out similar reforms.
Developers say the delays are a big hurdle. “It still takes at least two years to get all the clearances and actually begin work on the site. How does the government expect me to sell the flats in 2018 or 2019 at 2016 price?" asks a developer who spoke on condition of anonymity.
In May 2015, a survey by the housing department highlighted the need for 2.5 million affordable houses across the state. The target of building 650,000 houses by 2022 will, even if completed, fall miserably short of this requirement.
This year, the government signed an agreement with the Maharashtra Chamber of Housing Industry to build 500,000 affordable houses in Mumbai and the Mumbai Metropolitan Region.
“These houses will be built on a public-private partnership basis. The developers will build the houses and the government will facilitate (the process) by issuing early clearances and a subsidy of Rs1.5 lakh on each affordable flat to the buyer," the housing department official said.
Given the land economics of Mumbai, many affordable housing projects get pushed to the outskirts.
“The city is linear. So, affordable houses are pushed to such faraway places that people find it difficult to commute. Many of the affordable housing projects that are launched on the outskirts of the city have no social fabric and no economic activity," said Pankaj Kapoor, managing director, Liases Foras, a real estate advisory firm.
Infrastructure, especially in terms of connectivity, is a problem because land given for housing projects is usually in the outskirts, said Rajeeb Dash, head of marketing, Tata Housing and Development Co. Last-mile connectivity is holding back a lot of people from building affordable houses, said Gurudatta Deshmukh, vice-president, Wadhwa Group. “What the developers cannot manage and will never be able to manage is the infrastructure," he added.
