Refocus & Integrate Affordable Housing
AFFORDABILITY CAN BE DEFINED IN THE CONTEXT OF INITIAL COST OF HOUSE, CONSTRUCTION COST OF HOUSING, BY VIRTUE OF LOCATION FROM THE WORK PLACE OF OWNERS OR AS PER OPERATION & MAINTENANCE COST OF A HOUSE. THUS, THERE IS A NEED TO INVESTIGATE THE AFFORDABILITY IN ITS ENTIRETY. BY: SAPNA SRIVASTAVA Various measures announced by the government to boost affordable housing segment have gradually resulted in the stable sales for this category. Almost 56% of all homes that were sold in the October-December 2019 period were units priced within the Rs 45-lakh bracket. Similarly, 52% of new project launches during this three-month period were in this segment. The figures indicate a latent consumer demand in the affordable housing segment that should convert into more sales in this year onwards. THE DEVELOPER’S APPROACH TO AFFORDABILITY The cost of land, capital, construction and minimum wages of workers makes it difficult for the developers to deliver affordable beyond a point. Developers therefore have resorted to lesser carpet area. Customers across the country has responded positively and the sales of such units have risen substantially. Sanjay Dutt, MD & CEO, Tata Realty and Infrastructure Limited, said, “Homebuyers are becoming increasingly conscious about the size and layout of their apartments. The typology offered by us varies from 708 sqft (1.5 BHK) to 1286 sqft (3BHK). Tata Value Homes caters to the demand of affordable housing in India and carpet area begins at 355 sq.ft, going up to 1200 sq.ft. Our newly launched towers T21 and T29 in the New Haven Bengaluru project have a combined total of 104 units of 2 & 3 BHK apartments that are larger than the average-sized abodes. New Haven Boisar, Mumbai and Bahadurgarh, Gurgaon follow the same philosophy.” Rohit Poddar, Managing Director, Poddar Housing and Development Ltd stated, “We learned the hard way that the government’s plan to deliver quality infrastructure takes time despite best efforts. Hence, it is important to choose a location where social infrastructure already exists. The real challenge at such locations is to buy land that is cheap enough to make the houses affordable for the end user. The cost of the apartment is directly linked to the land value along with various other Govt taxes, govt premiums, ready reckoner rates etc.” Yash Miglani, Managing Director, Migsun Group, added, “The union government has capped prices of affordable houses at a maximum rate of Rs 45 lakh. With soaring cost of input material and labour over a period of time, it has been difficult for developers to provide all amenities under Rs 45 lakh while, maintaining the maximum carpet area of 90 square meters in non-metro cities and 60 square meters in metro cities. Therefore, developers have been reducing carpet areas in order to provide all amenities by compromising on the space component.” Vikas Garg, Deputy Managing Director, MRG World was of the view that the developer's primary challenge is keeping the cost of the houses in affordable range, which is directly proportional to the cost of development that in turn depends on cost of raw material, etc. “For midincome consumer demand for quality affordable homes, the best solution would be if the government can provide cheaper land within the city limits so that the working class can easily commute from workplace to home.” THE ROLE OF DESIGN & TECHNOLOGY The architecture & construction systems play an important part in reducing the operational cost of affordable housing. Being a “low cost high volume” segment, space design & technology becomes critical for developers. “Earlier the low labour cost was the attraction. However, now it takes lesser time to complete the project with the use of pre-cast technology, 3D pre-cast or robotics, that is helping deliver low cost housing. Today, how we conceptualize, design, do land profiling and use satellite imageries are helping the sector in bringing down the overall turnaround time for projects and managing inventory better,” said Dutt. “One of the most important contributions to the delivery of affordable housing is often the most overlooked – the contribution of space design. Developers are now focusing on crucial issues, such as affordable living, sustainable design and flexible housing, providing savings in both upfront costs and the ongoing cost of occupation,” stated Anurag Goel, Director, Goel Ganga Developments “Developers have been trying to ensure that all amenities are provided within the limited space and budget. Nevertheless, availing quality architectural firms also comes with a price tag and eats into the limited financial resources. The government of India can consider raising the limit of ceiling on affordable housing prices from the prevalent rate of Rs 45 lakh in order to ensure better quality and design," expressed Miglani. WHAT MORE CAN BE DONE? “Government needs to rationalise the availability of land parcels in a prudent manner with regards the cost, legalities & clearance of titles and emphasize on the Single Window Clearance for speedy approvals. To boost Housing for All By 2022, infrastructure status was allotted to affordable housing to avail the associated benefits like lower borrowing rates, tax concessions and increased flow of foreign & private capital. Currently, Banks/ NBFCs are restricted to lend not more than 10% of their balance-sheet to real estate sector. Through the infrastructure status, this cap need not be maintained which can provide further access to credit at comparatively lower rates,” said Amit Goenka, MD & CEO at Nisus Finance. “The home loan market can be made more accessible to lower and lower-middle income groups through competitive loan rates. The government should consider raising the limit of Rs 1.50 lakh on which additional tax deduction upon interest on home loans for affordable houses is provided, extending this for a period of five years from the date of announcement. Tax holidays can also be provided to developers for a longer period of time to make affordable housing a profitable segment, added Miglani.
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