Affordable housing to include middle classes too: Venkaiah Naidu

New Delhi - February 27, 2017: There are different housing needs in India - from the lower, middle and the upper middle classes.  “When we talk about affordable housing for all, we talk about all,” Venkaiah Naidu, Union Minister of Urban Development, Housing and Urban Poverty Alleviation said.

In an exclusive conversation with Magicbricks editorial head, E Jayashree Kurup, Naidu said the primary responsibility to provide housing lies with the Central and state governments. He believes that with so many reformatory steps taken by the government, the sector will soon pick up pace.

“Providing infrastructure status (affordable housing) will bring more money from banks to the market and will focus on creating more housing stock for the needy.” Moreover, the Prime Minister has announced interest rate subvention schemes of 4 and 3% respectively, for housing of Rs 9-12 lakh and Rs 12-18 lakh. The budget announcement that instead of built-up area of 30 and 60 sq meter, the carpet area will be considered, will help create bigger houses for all, including the middle classes, he said.

Adequate infrastructure

The Centre is facilitating creation of funds for urban local bodies to build better infrastructure and make cities more liveable. Adequacy of infrastructure is important. Comprehensive planning is underway for cities such as Bengaluru, Pune and Noida. “We are taking into account the water supply, roads, etc. and creating a five-year development plan,” shared Naidu. All states are invited for a discussion on this issue on February 28th 2017 in Delhi.

Focus on core infrastructure

Drainage, sewage, main roads, byroads, rain water drainage, maintenance of water bodies and other core infrastructure elements should be the key focus of state governments. Around 23,000 houses lie vacant in Delhi alone because of lack of infrastructure. “Where there are people there are no houses and now there are houses with nobody residing in them. It is a grave problem,” said Naidu. His advice to the state governments is to look after the infrastructure needs; only then will these houses lying in the peripheries of cities and elsewhere be taken up. Low cost housing will be a success only when states perform.

The minister wanted state governments to push the private sector to venture into building affordable housing. With incentives such as infrastructure status, more access to funds and faster approvals being provided, it is good business for the developer community, he stated.

It is a joint effort by the Centre, states and local bodies. People only look for better quality and good services. If the states can figure out a method to provide these then there’s no going back. “They should study the development patterns of different states. Learn from other’s mistakes,” suggested Naidu.

He quoted the example of Rajkot in Gujarat, “It is a perfect example of how land can be monetised and used for rebuilding houses.” States should be agile and respond to the policy changes.

Approvals within 60 days

A model approval process is being notified in Delhi and Mumbai. There will be an online process through which applications will be sent and approvals will come in 60 days. In case the approval does not come on time, the owner or developer can file an affidavit and start construction. Efforts are on to implement the process across the country.

In addition, the Ministry of HUPA and Urban Development has worked with nine ministries. “Developers need around 41 permissions from the government which takes a lot of time. At the same time we are asking them to stick to timelines. So, I held meetings with several ministries and we agreed on some measures,” he said.

He informed that the municipal bodies will start working through colour coded maps which they can consult, identify the area and grant approvals quickly.

Policy drives transparency

Other than interest subvention and approvals, transparency is another key component. “RERA is a simple regulation and not strangulation. It is to stop fly-by-night developers in the sector.” The aim is to create a central advisory mechanism, to ensure fair practices at the Centre and the states and to realise the mission of Housing for All By 2022.

PMAY will pick up

Naidu seemed positive about the Pradhan Mantri Awas Yojna (PMAY). He affirmed that PMAY has experienced a slow start but going forward the scheme will pick up. With legal sanctions made by the government, the scheme will become a success. He mentioned, “The economy is picking up as money is flowing in the market and interest rates have come down. This will make people look at a purchase.”

CLSS offtake

The aim of the Credit Linked Subsidy Scheme (CLSS) is to expand institutional credit flow to the housing needs of urban poor. Credit linked subsidy will be provided on home loans taken by eligible urban poor (EWS/LIG) for acquisition or construction of a house. Naidu mentioned that with reputed banking institutions such as the National Housing Bank supporting the scheme, its awareness will grow. The states should show active involvement.

On states meeting RERA deadline

Naidu expressed confidence that the policy of incentives and disincentives would help in ensuring that all states meet the deadline of notifying the Real Estate Regulation Act (RERA) and also announcing the regulator. He said that he has been actively pursuing the matter with the states. While some states have notified the rules, some are yet to do so. “By the deadline of May 2017, I am sure all the states will follow suit and notify the rules,” he added.

About the issue of provisions being watered down in some states, Naidu said the situation differs from state to state. “Land is a state subject and they know it better. But, I have been requesting them for no deviation and no dilution.”

Will prices drop?

Prices will not drop suddenly as in stock markets, said Naidu. Land prices are artificially escalated and there should be a correction. Demonetisation and implementation of RERA are two important ways to push in this direction.

Ultimately, he was certain that public opinion and consumer pressure would ensure that the final rules are in the spirit of the legislation passed by the Parliament. “In a democracy, enlightened public opinion will make policy more vibrant and meaningful.”

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