Affordable housing: Driving the real estate sector of India
In a recent study known as the Bloomberg Global Housing Affordability Index, Mumbai stood at rank four in the list of least affordable cities around the world, in terms of housing relative to income. Affordable housing remains a far-fetched dream for many in our country still, and the past few years have witnessed stagnancy in this sector due to factors such as the costs of urban land, inadequate infrastructure, and economic fluctuations. Population growth combined with the scarcity of urban land worsens the situation and the past few years saw the prices and rents of houses skyrocketing.
The government is placing more and more emphasis on this sector because of which the affordable housing sector was conferred industry status in 2017. Developers such as DB Realty are working towards this objective ceaselessly. Apart from this, a few steps such as the following, taken in the political circle could play a game-changer in the real estate sector:
• The Government of India initiative ‘Housing for All by 2022’ saw the renaming of the Indira Awas Yojana as the Pradhan Mantri Awas Yojana Grameen. While this is not important, the fact that this scheme, along with the Pradhan Mantri Awas Yojana Urban which is aiming at building a total of 50 million houses by 2022 is certainly pertinent.
• Another major issue was the inability of the applicant to give the margin for taking a housing loan, which has been mitigated by the Government. The Government is giving a subsidy of 6.5 at the lowest level and crediting the entire subsidy of a 20-year loan to the loan account of the applicant. This has reduced EMI and enhanced affordability.
• The government has also allowed withdrawals from the EPFO to as much as 90 per cent of the amount of housing, if there are eight other people doing so for a house in the same society.
• The vital infrastructure status was given to affordable housing in the Union Budget 2017-18 which will improve the sources of house developers for funding, help decrease the borrowing cost they bear and give incentives to the banks to lend to such development projects.
• The interim budget of 2019 coincided with the target of the government. It put into place the challenges faced in relation to demand, in terms of incentives to buyers and supply, in terms of incentives to the developers.
• The extension of tax rebates for affordable housing projects and exemption of notional tax on unsold inventory to two years has proved to be beneficial for the developers if we look at it from the supply side.
• From the demand perspective, added flexibility to deploy capital gains from property transactions and breaks for taxpayers with annual taxable incomes of up to Rs 5 lakh will give a boost to the industry.
Planning and execution of efficient designs, such as that of DB Woods Goregaon is one step that can be taken by developers. DB Realty Orchid Ozone is another such model that is capable of solving the problems of cost, efficiency and space if invested in appropriately.
Affordable housing is a basic necessity that is of immense importance, considering the sheer numbers of the migrant populations to cities each year, and the ever-increasing demand for shelter that comes with development, the nuclearization of families and other factors combined.