Mumbai: The Maharashtra government’s new housing policy aims to build 1.1 million houses in the Mumbai Metropolitan Region (MMR) and another 800,000 across the rest of the state by 2022.

It is scheduled to be announced by the end of the month or early next month. A draft has been circulated among legislators and members of Parliament from the state for their feedback. Mint has reviewed a copy of the draft.

The thrust of the proposed policy is on the state government playing an interventionist role to keep prices of houses under check. This is a complete departure from the 2007 policy, which focused more on the private sector to create affordable housing stock.

“The government’s role will be that of an interventionist, that is, to introduce supply periodically, and also that of a facilitator, putting in place the necessary regulatory framework to encourage supply from the private sector," the draft reads.

It says the key factor impacting affordability of housing is the cost of land. The only way to reduce cost is to increase supply, with the government playing the role of a catalyst.

To achieve this objective, it calls for all government land to be pooled, including that owned by government agencies such as the Maharashtra Housing and Area Development Authority (Mhada), the Mumbai Metropolitan Regional Development Authority (MMRDA), the City and Industrial Development Corporation (Cidco) and municipal bodies, among others.

A master plan for this land bank would be prepared by Mhada within six months of notification of the policy. A task force headed by the chief secretary would supervise the exercise, the draft says.

The pooled land would be used to build houses for economically weaker sections (EWS), low-income groups (LIG) and middle-income groups (MIG) in a ratio of 30, 30 and 30. The rest of the land would go to create open spaces, parks and recreational spaces.

The draft also talks about reducing stamp duty for affordable homes from the present 5% of transaction value to 1%, 2% and 3% for EWS, LIG and MIG houses, respectively.

The government would allot 50% of the funds sanctioned to agencies such as Mhada, Cidco, MMRDA, Nagpur Improvement Trust and Pimpri-Chinchwad New Township Development Authority for the next 10 years to create the affordable housing stock, the document says.

The proposed policy, while emphasizing the role of government agencies, also has a role for the private sector and rolls out a series of incentives to encourage private participation in building affordable houses on government land. It will offer additional floor space index (FSI) to builders. FSI indicates the construction allowed on a given plot of land.

Besides, 10% of the total apartments in a private builder’s project can be of a larger size. The policy fixes the size of EWS, LIG and MIG flats at 250 sq. ft, 500 sq. ft and 700 sq. ft, respectively. Another incentive to the private sector is the permission to redevelop dilapidated chawls (also known as cessed buildings) and 105 Mhada colonies in Mumbai. Besides these, developers with 25 hectares of contiguous land will be eligible to participate in township projects in MMR—covering eight municipal corporations, nine municipal councils and 1,000 villages.

Sanjay Dutt, executive managing director for South Asia at property consultant Cushman and Wakefield, said, “The private sector will be interested in affordable housing projects where land prices are reasonable, and which are near transport nodes such as suburban railway, metro and monorail projects and also have social infrastructure such as schools, hospitals and recreational facilities. So, apart from giving incentives like higher FSI, the government will also have to invest in building infrastructure."

Simpreet Singh, convenor of Ghar Bachao Andolan, an organization that works for the right of housing for the urban poor, said, “Just a policy isn’t enough. The government will have to make suitable changes in laws and rules as well. If it is bringing the policy now, it will take at least another year to amend the laws and rules. So we have doubts about how far the government will be successful in achieving its stated goal of giving homes to all by 2022."

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