Haryana New Integrated Licensing Policy 2015 to turn the tables for real estate?

The Haryana state government has recently unveiled the New Integrated Licensing Policy (NILP) 2015 for residential and commercial sectors in high potential zones. The aim is to unlock land in hyper and high potential urban complexes in certain identified cities in the state. The policy is drafted to strike a perfect balance between the desires of farmers, property buyers, real estate developers and the government.

The need

A retrospective of the old policy brings out a few limitations. The group housing development in the old licensing regime was limited to a mere 20% of the net planned area of a residential sector. In the rest of the 80%, one could build row houses or plotted residential colony. But for that, the minimum land requirement was 100 acres. Due to these limitations, the development goes on halt leaving many unutilised land parcels in various sectors. It is this unutilised land in urbanisable areas that Haryana’s Department of Town and Country Planning is now attempting to unlock via the new provisions.

Impact on supply

As per the new policy, minimum area requirement has been reduced from 100 acres to 25 acres. For the first time, the Haryana Government has introduced the concept of Transferable Development Rights (TDR). This will allow farmers or landowners to voluntarily monetise even a small land pocket that they own; and that too at current market prices.  TDR is offered to the land owners who do not meet the minimum criteria of 25 acres. There is no restriction now and one can build group housing, row houses etc. within the prescribed FAR (Floor Area Ratio). All these initiatives will help unlock more land for development and undoubtedly increase the supply.

Considering a major part of the country’s population will have moved to urban India over the next decade or so, introduction of a policy in favour of urban household development is a boon. 

To accommodate the large rural population pouring into the cities, the Government had unveiled a policy to promote housing rentals. Click here to read Surabhi's perspective on the Rental Housing policy.

Impact on prices

The policy will not only enable development of small residential projects but also encourage developers to build smaller unit sizes. Earlier, builders used to focus primarily on building big size apartments to consume the FAR to the fullest. The density restriction norm had a role to play in this.  With the revised norms where FAR is 1.0 and density is 250 PPA (Person per acre) the developers are likely to develop smaller configurations, which will eventually reduce the ticket size and increase affordability. Though, price reduction is not likely in the near future because of two reasons.

  1. Land cost is soaring high in developed sectors. Hence it will not be feasible to sell at lower prices.
  2. There is high demand for small size configurations.

Looking at the brighter picture, NILP 2015 will help rationalise prices in the long run and give the much needed impetus to the real estate industry. NILP 2015 if implemented well will prove to be an effective land acquisition policy that allows for a healthy land pooling and urbanized India.


About the author

Surabhi Arora, leads the research team in India and has more than 13 years of experience in carrying out multi-disciplinary research and analysis in the area of finance and real estate industry. Surabhi specialises in real estate economics, policies, commercial and residential real estate research with in-depth knowledge of market dynamics across major markets in India.


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