Affordable housing allows those from low income groups (LIG) and the economically weaker sector (EWS) access to homes and finance. The proliferation of slums has added to the need for such housing. Despite many government initiatives, policies and schemes, providing affordable housing has proved challenging.
Delays in completing projects and abandonment are major setbacks. Ironically, waiting for permissions, the conversion of land parcels and a lack of information have contributed to such delays. Scarcity of appropriate acreage is another problem.
Partner
HSA Advocates
Rising costs are another obstacle. Not only are members of the LIG unable to buy houses, they cannot pay high maintenance charges. This is despite the affordable housing policy, 2013 stating that no maintenance charges should be charged for five years from the grant of an occupancy certificate. Although the government has reduced stamp duty for affordable housing, other charges, including development charges, land registration and government taxes and premiums make up a substantial proportion of project expenses, increasing overall costs. Applications for housing loans require the submission of documents including details of sources of income, a permanent residential address and a secure job. Most disadvantaged groups do not have such addresses and jobs, let alone the ability to provide documentation. Moreover, they are charged high interest rates and struggle to pay. They have little or no collateral to offer.
Senior associate
HSA Advocates
The Real Estate (Regulation and Development) Act, 2016 was a welcome protection for buyers of affordable housing. It safeguards the interests of home buyers, emphasising the timely completion of projects and encouraging better accountability and transparency. It imposes stringent timelines and regulations, breach of which lead to penalties and the deregistration of projects.
The need for affordable housing grows, as the population increases and urbanises. Current schemes and initiatives help to address this need, but more needs to be done. The government and states have, nonetheless, introduced a number of effective mechanisms to help people of all income levels buy houses. The Pradhan Mantri Aawaz Yojna (Urban) (PMAY-U) is a flagship government scheme launched in 2015. It benefits the EWS, the LIG and middle income groups (MIG) by offering benefits, such as subsidies for interest on home loans and the use of sustainable and eco-friendly building technologies. This extends to essential services such as water, gas and electricity connections and gives preference to seniors and those with disabilities over ground floor housing.
The Delhi Development Authority’s 2018 Housing Plan offers several housing schemes for the LIG including flats at reduced prices allocated by an online ballot. In June 2023, it launched its first online First Come First Serve programme, offering 5,600 flats for the LIG, the MIG and the EWS. More may be provided, depending on demand.
Associate
HSA Advocates
The Haryana Housing Board (HHB) provides necessities such as sanitation, transport and water for the EWS. The authority’s New Scheme provides the poor and needy with houses and the HHB works with the PMAY-U to give medium category houses to the less well off.
The Maharashtra Housing and Area Development Authority manages its affordable housing scheme for the EWS through a lottery. It enables residents to buy property in the most sought-after areas of Pune and Maharashtra at reasonable cost.
The Tamil Nadu Housing Board Scheme allocates houses to the EWS by advertisement. It allots commercial units to those groups through a sealed tender and open auction process. In April 2023, the Tamil Nadu Urban Habitat Development Board released 240 residential units for the EWS and the LIG, at a cost of INR210 million (USD2.5 million).
Affordable housing improves standards of living, stability and economic flexibility. Rising urbanisation and the consequent need for affordable housing means the government should adopt a holistic approach. The income tax bracket for EWSs was recently raised from INR300,000 to INR600,000, thus increasing their disposable income. The Maharashtra state government has introduced a new policy, focused on affordable and sustainable housing and offering concessions and incentives. It encourages redevelopment by including public-private participation rental housing and concentrating on green building technology.
Himani Singh Sood is a partner, Juhi Dave is a senior associate and Shrusti Shah is an associate at HSA Advocates.
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