This paper focuses mostly on the developer’s side because affordable housing is not possible by the government alone and government is not giving any special type of benefits towards the developer which is making them to loss interest in this segment. The Millions of Indians want to have roof over their heads, yet at the same time hundredth and thousands of housing units remain unutilized throughout the country, the reason is simple, the developers are investing in mid and premium segments but are increasing the material and labor costs while financing the segments, making affordable housing segments unaffordable. The Perceptional risk at keeping buyers away are approached from two angles, the First one, looks at the need of organized players such as Tata housing and Mahindra life who brought innovation and assembly line approach to this sector. Demands are simple and have a single-window of simplified approval process that includes Digitalized land record to make developing land easier. Also to enable mass housing within the city along with simplified taxation on affordable homes schemes and taxation like- Vat, the service tax, stamp duty, registration, if handled by the government then the mass affordable housing has the potential of reducing the cost of ownership by 15 – 20%.
The Other method to simplify Mass Affordable housing is to make the smaller developer understand the value of the land that is critical to crack the market. Organizations like “Brickeagle” are helping developers to achieve that. It is important because bank did not want to educate the developer to buy the land parcel. And private company did not see affordable housing as a worthy bet.
Inhaltsverzeichnis (Table of Contents)
- Abstract
- Introduction
- Challenges
- How it is better for developer and the people who show interest to get in this sector?
- Why are developers hesitant about getting into in the affordable housing sector?
- Do federal structure actually works to undermine the growth of affordable housing?
- Positives
- How superior technology help in bringing down the cost in much efficient manner?
- Land productivity
- Inter subsidies
- Is there enough communication sent out to the benefices?
- Components which really contribute as far as housing is concerned.
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This paper aims to analyze the challenges and opportunities in the affordable housing sector in India, focusing primarily on the perspectives and motivations of developers. It explores the reasons behind the hesitancy of developers to engage in affordable housing projects and examines the role of government policies and regulations in either hindering or facilitating development.
- Challenges faced by developers in the affordable housing sector in India.
- The role of government policies and regulations in influencing developer participation.
- The impact of land costs and financing on the affordability of housing.
- The potential of technology to reduce construction costs and improve efficiency.
- The need for improved communication and awareness campaigns to reach potential buyers.
Zusammenfassung der Kapitel (Chapter Summaries)
Abstract: This abstract highlights the crucial role of developers in achieving affordable housing in India, emphasizing the lack of government support for developers and the resulting disinterest in the affordable housing segment. It contrasts the abundance of unutilized housing units with the vast need for affordable housing, attributing the disparity to developers' focus on mid and premium segments due to higher profit margins. The abstract suggests addressing this issue through two approaches: organized players bringing innovation and streamlined processes, and empowering smaller developers by providing land valuation support.
Introduction: The introduction defines affordability from dual perspectives: cost reduction and buyer empowerment. It highlights a significant shortage of affordable housing in urban and major areas, despite existing supply, due to a gap between buyer affordability and the actual cost. The introduction sets the stage for an analysis of the challenges and opportunities in bridging this gap.
Challenges: This section identifies significant obstacles in the affordable housing sector. Key challenges include difficulties obtaining approvals, a scarcity of land within city limits, insufficient funding for land and construction costs, and a lack of access to cost-effective technologies. The section underscores the complexities of navigating regulatory processes and obtaining necessary approvals.
How it is better for developer and the people who show interest to get in this sector?: This section shifts the focus to potential benefits for both developers and consumers. It argues for a more balanced approach, emphasizing support for developers alongside consumer-focused initiatives. The section highlights the high cost of land within municipalities as a major impediment and discusses government efforts to address the supply side, including tax rebates and long-term loans for developers. The importance of a streamlined approval system is also stressed.
Why are developers hesitant about getting into in the affordable housing sector?: This section delves into the reasons behind developer reluctance to participate in affordable housing. It explains the lack of incentives for affordable housing projects compared to more lucrative mid and luxury segments. The section mentions the shift in government policy in the 2017 budget towards incentivizing developers and notes the earlier use of tax exemptions as investment tools, leading to an investment-driven rather than needs-based market.
Do federal structure actually works to undermine the growth of affordable housing?: This section explores the impact of India's federal structure on affordable housing. It points to inconsistencies between state and central government policies, particularly regarding land acquisition and taxation. The section further highlights the complexities of navigating multiple layers of approvals and the significant delays that can increase land costs substantially.
Positives: This section presents a more optimistic perspective by highlighting positive developments in the affordable housing sector. It emphasizes improvements in infrastructure, the availability of land banks, and advancements in construction technologies. The section suggests that with government intervention focusing on infrastructure, land costs, tax rates, and approval processes, significant progress can be made.
How superior technology help in bringing down the cost in much efficient manner?: This section focuses on the transformative role of technology in reducing construction costs and increasing efficiency. It addresses the persistent shortage of skilled labor and advocates for the adoption of prefabrication technologies to accelerate project completion. The section underscores the potential for technology to significantly shorten project timelines.
Land productivity: This section tackles the issue of high land costs, comparing India's situation to other developed countries with effective vacant land taxes. It emphasizes the link between land speculation and inflated housing costs, advocating for policies that incentivize land development and reduce speculation.
Inter subsidies: This section analyzes the impact of government subsidies, specifically the Credit Linked Subsidy Scheme (CLSS), on affordable housing. While acknowledging the benefits of CLSS, it argues that the cost of housing needs to be reduced further to align with the income levels of potential buyers. The section also points out issues related to sector rates and customs duties that increase the final cost for consumers.
Is there enough communication sent out to the benefices?: This section highlights the need for improved communication to reach potential beneficiaries of government schemes. It calls for more extensive awareness campaigns, similar to successful public health campaigns, to inform people about the available subsidies and other assistance programs. The section also emphasizes the need for better communication from all stakeholders in the sector.
Components which really contribute as far as housing is concerned.: This section identifies key cost components affecting housing affordability: land (including Floor Space Index and Reckoner value), construction costs, finance costs, and taxation. It advocates for government intervention to rationalize costs, particularly through standardization of construction practices and materials, and the simplification of taxation and approval processes.
Schlüsselwörter (Keywords)
Affordable housing, India, developers, government policies, land costs, financing, construction costs, technology, subsidies, communication, taxation, regulatory challenges, market dynamics, supply chain efficiency.
Frequently Asked Questions: Affordable Housing in India - A Developer Perspective
What is the main focus of this paper?
This paper analyzes the challenges and opportunities in India's affordable housing sector, primarily focusing on developers' perspectives and motivations. It explores why developers are hesitant to engage in affordable housing projects and examines the influence of government policies and regulations.
What are the key challenges faced by developers in the affordable housing sector in India?
Key challenges include difficulties obtaining approvals, land scarcity within city limits, insufficient funding for land and construction, lack of access to cost-effective technologies, and navigating complex regulatory processes.
Why are developers hesitant to participate in affordable housing projects?
Developers are hesitant due to the lack of incentives compared to more lucrative mid and luxury segments. The paper notes the shift in government policy towards incentivizing developers, but highlights the earlier reliance on tax exemptions leading to an investment-driven, rather than needs-based, market.
How does India's federal structure impact affordable housing?
Inconsistencies between state and central government policies regarding land acquisition and taxation create complexities. Navigating multiple layers of approvals causes significant delays, increasing land costs.
What are the potential benefits for developers and consumers in the affordable housing sector?
A balanced approach supporting both developers and consumers is advocated. Government support for developers (tax rebates, long-term loans), streamlined approval systems, and consumer-focused initiatives are highlighted as crucial.
What is the role of technology in reducing construction costs?
Technology, particularly prefabrication, can significantly reduce construction costs and improve efficiency by addressing the skilled labor shortage and accelerating project completion.
How can land costs be addressed?
High land costs are addressed by comparing India's situation to other countries with effective vacant land taxes. The paper emphasizes the link between land speculation and inflated housing costs, advocating for policies that incentivize development and reduce speculation.
What is the impact of government subsidies, such as the Credit Linked Subsidy Scheme (CLSS)?
While CLSS is beneficial, the paper argues that housing costs need further reduction to align with potential buyers' income levels. Issues related to sector rates and customs duties that increase the final cost are also pointed out.
Is communication with potential beneficiaries of affordable housing schemes sufficient?
The paper highlights the need for improved communication through extensive awareness campaigns to inform people about available subsidies and assistance programs. Better communication from all stakeholders is crucial.
What are the key cost components affecting housing affordability?
Key cost components include land (including Floor Space Index and Reckoner value), construction costs, finance costs, and taxation. Government intervention to rationalize these costs through standardization and simplification of processes is advocated.
What are the key positive developments in the affordable housing sector?
Positive developments include improvements in infrastructure, the availability of land banks, and advancements in construction technologies. Government intervention focusing on infrastructure, land costs, tax rates, and approval processes is seen as key to progress.
What are the key takeaways from the abstract?
The abstract emphasizes the lack of government support for developers and the resulting disinterest in affordable housing, despite a vast need. It suggests solutions involving organized players bringing innovation and support for smaller developers through land valuation support.
What is the definition of affordability used in this paper?
Affordability is defined from dual perspectives: cost reduction and buyer empowerment. The paper highlights a significant shortage of affordable housing due to a gap between buyer affordability and the actual cost.
- Arbeit zitieren
- Rajat Singh (Autor:in), 2019, Affordable housing in India opportunities and challenges for developers, München, GRIN Verlag, https://www.grin.com/document/500590
