Bhupendra Pratap Singh(2013bpln010)
Affordable Housing :
A Commercial or Institutional Challenge?
STRUCTURE OF PRESENTATION
Housing Policy and Politics
Policy Framework and Regulations
Union Budget 2013-14
China’s Housing Policy
As per 2011 census, India has a population of 1,210.98 million, out of which, 377.1 million reside in urban areas. During
2001-2011, the urban population of India grew at a CAGR of 2.8%, resulting in the increase in level of urbanisation from
27.81% to 31.16%. Rapid urbanisation coupled with paucity of housing stock has resulted in people increasingly living in
slums, squatter settlements and unauthorized colonies.
Lack of Shelter and Services – Manifold Implications
-High price of land and real estate in cities has forced the poor and economically weaker sections of the society to
occupy the marginal lands characterized by poor housing stock, congestion and obsolescence.
-the number of unauthorized colonies jumped from 1,432 in 2007 to 1,639 in 2012.
-A wide gap between the demand and supply of housing – both in terms of quantity and quality, exists in the country.
Affordable housing encompasses housing for the EWS, LIG and MIG by MoHUDA.
Affordable Housing Norms for Different Categories by KPMG.
HOUSING POLICY AND POLITICS
-Developing affordable housing in India confronts major challenges due to several economic, regulatory and urban issues.
Political control influences both policy and planning decisions.
Excessive Control on Land Development
Excessive control over availability and usage of land and Floor Area Ratio (F.A.R) has led to artificial scarcity which against
the high demand for shelter has led to escalating housing prices.
Poor Monitoring of Resources
Wide gap between the demand and supply along with poor management of land resources and lack of transparency in the
system has led to the proliferation of slums and unauthorized colonies.
Informal Market Transactions
Poor households, who cannot afford to substitute capital for land, constitute an informal market independent from and
parallel to formal market.
Cases of failure of agreements between developers and residents of these settlements undermines the confidence of the
poor for entering into redevelopment of slums, squatters and illegal colonies.
POLICY FRAMEWORK AND REGULATIONS
Post-independence housing programs had a broader focus covering high, middle and low income groups under its ambit.
Subsequent policies have focussed on housing for the poor.
1961 Rent Control Act to protect renters from eviction and rapid increases in market rent, by freezing rents at a certain
The first National Housing Policy was initiated in 1988.The policies focus on the role of public sector as ‘facilitator’, and
increased role of private sector.
NUHHP 2007 has identified ‘Affordable Housing for All’ as a key focus area to address concerns that could potentially
encumber sustainable urban development.
Jawarhar Lal Nehru Urban Renewal Mission (JNNURM) was launched in December 2005. One of the aim of this
programme was construction of 1.5 million houses for the urban poor during the mission period (i.e. 2005–2012) in 65
Various recent schemes for housing but for success, loopholes in the existing policies need to be plugged.
UNION BUDGET 2013-14
In order to promote home ownership, the 2013-14 Union Budget allows for an additional deduction of interest up to Rs
1,00,000 from the taxable income if a person buys his first home, by taking a loan of up to Rs 25 lakh from a bank.
Priority Sector Lending by RBI (provisions by RBI for encouraging development of affordable housing)
-Bank loans to any governmental agency for construction for slum, subject to a ceiling of Rs. 10 lakh per dwelling unit.
- For the purpose of identifying the economically weaker sections and low income groups, the family income limit of Rs.
1,20,000 per annum, irrespective of location, is prescribed.
- Bank loans to Housing Finance Companies (HFCs) for slum clearance and rehabilitation of slum dwellers, subject to an
aggregate loan limit of Rs. 10 lakh per borrower.
- The maturity of bank loans should be co-terminus with average maturity of loans extended by HFCs. Banks should
maintain necessary borrower-wise details of the underlying portfolio.
UNION BUDGET 2013-14
URBAN HOUSING FUND
Urban Housing Fund will be set up by the National Housing Bank and will help in creation of new homes in the
budget and affordable housing categories, helping bridge the housing shortage in the country. A scheme for the
same has not been formulated yet.
LAND ACQUISITION ACT
The Land acquisition act which is meant to provide land for public purposes
CHINA’S HOUSING POLICY
Policy tools designed to regulate the market and reduce speculation
limits on multiple home purchases by individuals, stricter mortgage qualification rules including higher down payment
requirements, introduction of property tax schemes in some jurisdictions and aggressive reductions in the availability of
financing to developers.
China’s restrictive housing policy do a great job For example, new home prices in the nation’s four major
cities of Beijing, Shanghai, Shenzen and Guangzhou had declined also not any notable gains in home prices.
China’s new Housing Policy Phase is Characterized by Both — Restrictive and Promotional Approach
The ministry has announced that local governments should continue their policy of setting aside no less than 10 percent
of land sales proceeds to affordable housing projects. And the Ministry of Finance added, the central government will also
strictly supervise the low income housing funds from misuse. Local govts will also provide subsidized loans to private
developers to help them ease financing pressure.
The market is able to cater to the needs of the upper end of the society, but where affordability is a problem, policy
interventions are necessary that address the needs of this demography.
Policies that guide the housing market require bridging the gap between demand and supply through range of
measure targeting tenure, finance and land markets - to operate in an efficient manner.
Political commitment towards the development of large-scale affordable housing is the greatest necessity of urban
The biggest challenge associated with urbanization is that it has not kept pace with the housing needs of those living
in cities and those migrating to the cities.
Concerted efforts are required by multiple institutions to facilitate mass development in this sector. This would not
only prevent the proliferation of slums and unorganised real estate, but would also improve the life of about half of the
city’s population living in them.