Affordable Rental Housing Development for Urban Migrants /
Poor : Cabinet Approves..!
By Anuj Puri, Chairman – ANAROCK Property Consultants
The Cabinet approval for
development of affordable rental housing complexes (ARHC) for urban migrants
and poor is indeed a praiseworthy move which
will significantly help fulfil the government’s ambitious ‘Housing for All by
2022’ initiative.
Under this scheme,
vacant government-funded housing in urban cities will be converted into ARHC
via the PPP model and be rented out to migrants at concessional rates.
This initiative basically emanated
from the plight and migration of workers during the COVID-19-infused lockdown.
Absence of affordable rental housing
in major cities led to mass exodus of migrants that had zero income during the
lockdown.
Thus, the government had to shift
gears of their Housing for All initiative and include affordable rental housing
as part of it.
The scheme is clearly an attempt to
bridge the shortfall of dwelling units across the country. All states will also
be asked to develop such products and encourage private partnerships.
The move will not just regularise
the rental housing market across the country, but it will also add another
asset class to be considered by developers at large.
Furthermore, to attract private
participation from developers, the government has also rolled out special incentives such as use permission, 50% additional
FAR/FSI, concessional loan at priority sector lending rate, tax reliefs at par
with affordable housing, etc. to develop ARHCs on their own available vacant
land for 25 years.
Many developers have significant
land parcels both within the cities as well as their peripheries – the latter
land parcels being prime candidates for affordable housing, including rental housing.
Land parcels in the municipal limits
may not be viable for this purpose, given the high land rates.
However, low yields are likely to be a major deterrent for attracting
private participation. Even while funding for such projects is said to be given
at concessional rates, it may still be unviable for developers who have bought
land within city limits at steep prices earlier on.
Even while the government has tried
to address these deterrents and provide benefits and incentives, we will have
to wait and watch and see how this move can mobilise the interest from the
industry.
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