Revitalizing Affordable Housing: Developers' Plea to Finance Minister
Real estate developers urge the Finance Minister to implement key budget reforms to enhance affordable housing prospects, including reinstating CLSS and revising the definition of affordable housing
Affordable HousingReal EstateBudget ReformsFinance MinisterClssReal EstateJul 18, 2024
The current state of affordable housing is precarious, with high interest rates and decreased affordability taking a toll. According to Anarock Property Consultants, the share of affordable housing in residential sales has dropped from 38% in 2019 to 20% in 2023. Sanjay Dutt, Managing Director and CEO at Tata Realty & Infrastructure, emphasized the necessity of reinstating incentives like the CLSS under the Pradhan Mantri Awas Yojana (PMAY) and providing 100% tax holiday benefits for developers to revive this segment.
Revising the definition of affordable housing to reflect city-specific dynamics is also crucial. In cities like Mumbai, where affordability thresholds are insufficient, adjusting pricing benchmarks would ensure broader access to benefits such as lower GST rates and government subsidies. Dutt suggested that in Mumbai, properties valued between INR 50 lakh and INR 75 lakh should be considered for affordable housing.
Niranjan Hiranandani, Managing Director at Hiranandani Group, proposed an even higher value cap of INR 1 crore for metro cities that have experienced muted demand-supply scenarios. He also advocated for the removal of hindrances related to the 80-90% floor area ratio (FAR) and the payment of tax on profits via alternate minimum tax (AMT) or minimum alternate tax (MAT).
Currently, affordable housing is defined as a flat or house with a carpet area up to 90 square metres in metros and towns, and 60 square metres in major metros, or valued up to INR 45 lakh, or both. Pradeep Aggarwal, Founder and Chairman of Signature Global (India), supported expanding the definition of affordable housing to include homes worth up to INR 75 lakh with a larger carpet area. He believes that relaunching the CLSS or a similar scheme would significantly benefit homebuyers.
information The Pradhan Mantri Awas Yojana (PMAY) is a flagship mission of the Government of India, launched in 2015, with the aim of providing 'Housing for All' by 2022. The scheme has been instrumental in promoting affordable housing in the country.
Tata Realty & Infrastructure is a leading real estate development company in India, with a focus on delivering high-quality, affordable housing projects. Hiranandani Group is a renowned real estate developer, with a presence in major cities across India. Signature Global (India) is a prominent real estate developer, with a focus on affordable housing and commercial projects.
Frequently Asked Questions
What is the current definition of affordable housing in India?
Affordable housing is currently defined as a flat or house with a carpet area up to 90 square metres in metros and towns, and 60 square metres in major metros, or valued up to INR 45 lakh, or both.
What is the credit-linked subsidy scheme (CLSS)?
The credit-linked subsidy scheme (CLSS) is a government initiative under the Pradhan Mantri Awas Yojana (PMAY) that provides interest subsidy to homebuyers.
Why is the affordable housing sector struggling in India?
The affordable housing sector is struggling due to high interest rates and decreased affordability.
What is the current share of affordable housing in residential sales?
According to Anarock Property Consultants, the share of affordable housing in residential sales has dropped from 38% in 2019 to 20% in 2023.
What are the benefits of reinstating the CLSS?
Reinstating the CLSS would provide interest subsidy to homebuyers, making affordable housing more accessible and affordable.
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