Challenges in achieving Housing for All by 2022

Affordability is a relative term and non-specific in nature, which changes with the background. The absence of a fixed definition for affordable housing leaves the opportunity to explore this industry unfathomable. The affordable housing segment covers a major portion of the demand in the residential market, both in metropolitan cities and tier-II & III cities of India. It has been classified based on various socio-economic parameters such as household income, price, unit size, etc. by various government agencies and industry bodies. Typically, affordable housing caters to a section of the society, which has income less than the median income of administrative geography. Of late, the GST council has re-defined affordable home as having a carpet area up to 90 sq.mt in non-metropolitan cities and 60 sq.mt in metropolitan cities having a value up to INR 45 lakhs. 

In the past few years, there have seen numerous reforms in the real estate sector, which have laid the foundation for the country’s economic competitiveness. The government’s focus on achieving its goal of ‘Housing for all by 2022’, imparting infrastructure status, setting up of a dedicated fund under the National Housing Bank and formulation of public-private partnerships for affordable housing, etc. have given a much-needed boost to realty sector in India. Under the new GST structure, the levy on the affordable home will be 1% against 8% from 1st April, 2019. This impetus will earn a bonus for the private developers in the short-to-medium term. 

The role of private developers alongside the government is equally important. Considering the fundamentals of the sector and the government’s proactive initiatives, the participation of private developers could have been more intensive than the current reality. The availability of scalable land for affordable housing within the core area of the city has been a major issue for private developers. The government should play a critical role in releasing land for affordable housing projects and optimum allocation in the city master plan.  Credit-linked subsidies scheme under Pradhan Mantri Awas Yojana, have benefited thousands of end-users but didn’t improve the affordability of homes. Though homebuyers are usually aware of the scheme but are unsure of the criteria and eligibility to avail the scheme, hence do not factor the subsidy amount into their home purchase decision. Further, a significant number of low-income households are not eligible for accessing CLS benefits due to the location of their new homes. 

A perfect synergy between the government and private developers is required to achieve win-win situation on demand and supply side.

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