Regional Headline :

Affordable housing needs Centre’s push, say realtors

RAGHAVENDRA KAMATH Mumbai, February 14

WITH AFFORDABLE HOUSING losing its sheen in the past couple of years, top property realtors believe that intervention from government, in terms of subsidy schemes for borrowers or reduction in interest cost for land acquisition is the only way to revive interest in it. In the past couple of years, the share of affordable housingin total property sales has been consistently falling. In 2020, it constituted of 39% of total sales. This number has dwindled to 19% in 2023, according to data from Anarock

Property.

Pavitra Shankar, managing director, Brigade Enterprises said that they will look at launching new affordable projects if government comes out with incentives for the segment. “There is definitely a need forgovernment intervention in the form of incentives for developers, if the affordable housing segment is to grow significantly,” Shankar said.

With land prices in both metro and nonmetro cities on therise,alongwith input costs

NIRANJAN PAVITRA SHANKAR, HIRANANDANI, MD, BRIGADE MD, HIRANANDAN!I ENTERPRISES GROUP —

- ..DEFINITELY A | FEEL SOME NEED FOR ORIl GOVERNMENT BICERIAE U NTERVENTION NEEDED FOR N THE FORM OF BUYERSTOBUY |NCENTIVES FOR AFFORDABLE DEVELOPERS

of construction material, it is highly challenging forbuilders to create viable projects in the segment.

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Affordable housing needs govt’s push, say realtors

ALSO,THE X45-LAKH cap for buyers totakeadvantage of the earlier-introduced subsidy scheme (credit-linked subsidy scheme) was also an impediment,added Shankar.

Inaddition,thewithdrawal of Section 80-IBA (5), where developers wereallowed adeduction of 100% of the profits derived from such projects, subject to certain conditions was not extended beyond March 21. Thisalsoled to builder disinterest.

Niranjan Hiranandani,managing director of Hiranandani group said affordablehousingwould behitwithout CLSS. “We have to understand that interest on housing loans has gone up from 6.5% to 8%. During the CLSS days, buyers were getting loansat 5%.1feel somesortofincentive is needed for buyers, not for developers,tobuyaffordablehomes,’ Hiranandani said.

He also said that state governments should also look lowering levies for developers, adding that

50% of a project cost in Mumbiai is government levies such as stamp duty, GST and so on.

"In MMR (Mumbai Metropolitan Region), when premiums were reduced by 50% in 2021, affordable housing saleswent up by 12 to 15%. Those schemes should be brought back"hesaid.

In the recent interim Budget, the finance minsterannouncedascheme forthe middle class tobuyresidential properties. However, the fine print of the schemeisyet to come out.

In schemeslike CLSS, the subsidy was credited upfront to the accounts of borrowers and the rate of interest subsidyvaried between 3% to 6.5%, depending on income groups and was deducted from the loan account for a tenor of 20 years at the most. Launchedin 2015 aspartof Pradhan Mantri Awas Yojana-Urban, the scheme continued till last financial year and was not renewed in the last year’s Budget.

Sanjay Dutt, managing director and CEO of Tata Realty & Infrastructure also believes that CLSS had benefited affordable housing across the countryinabigway.

"Taxbenefits foraffordablehousinginterms of input credit should be given for developersand lowerinterestrates should be given forbuyers of such homes," he said, adding that since affordable housing has lower margins, approvals should be given fast to make them cost efficient.

Dutt added that since land prices have gone up, developers are selling units at higher prices."State governments should release land at subsidised rates for affordable housing,’ hesaid.

Kamal Khetan, chairman and managing directorat Sunteck Realty said theincentiveswill helpfillingthe urban housing gap,and may encourage many more developers to the mid-income and lower-income urban housing segment.However,he

added that it is advisable to enforce stricter regulatory measures on the scheme to prevent its misuse. In 2023, Sunteck,partneredwith IFCto invest up X750 crore to build half- adozen mid-income projects on the outskirts of Mumbai.

Land financing is anotherissue thatbuildersbelieve will help. Murali Malayappan, chairman and managing director of Shriram Properties said, “In the affordable housing segment, land constitutes a significant portion of unit value (20-30%),and its acquisition plays a pivotal role. While funding for construction is generallyavailable, the availability of funding forsuitablelandatareasonablerate of interest is paramount for developers.”

Brigade Enterprises’ Shankar added government should provide land to developers ‘on sale basis’at a significantly lower cost when compared towhatis currentlyavailablein the market.