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Feasibility of incentive housing


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A report on affordable housing policy

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Feasibility of incentive housing

  1. 1. 2011Housing Policy:Govt. of MaharashtraJoint Venture: MHADAand Private DevelopersEfforts By: Ar. Omkar ParishwadIII Sem, MURP, SPA, Bhopal.As part of internship assignment2011 Feasibility of Incentive housing in Urban/Rural areas of Pune Region Lack of affordable housing in Maharashtra state led the State government to formulate policies for provision of low cost housing. The main objective of these policies is to facilitate affordable housing and create adequate housing stock for Low Income Group (LIG) and Economically Weaker Section (EWS) on ownership or rental basis. The government is of the opinion that such housing stock can also be created on private land by incentivising the owners with an additional FSI in joint venture with MHADA.
  2. 2. Pune RegionPune District located in the western Maharashtra side on eastern side of Sahyadri mountainranges. The area of Pune region (district) as per census records is 15620 As per thecensus 2011, the total population of the Pune region is 9,924,224 and has 82.91% populationwhich is literate.Urban - Rural Classification (Census 2001)As per the census 2001, the total population of the Pune region is 7,232,555. There are1,517,041 households in Pune Region, of which 586,439 reside in Pune metropolitan. Thepopulation density is 462 people per/km². The current population Pune Region populationof Pune urban agglomerate is over 4 million; distribution  Pune Region Urban : 881,400 households  Pune Region Rural : 635,640 householdsAround 50% housing backlog in Urban for Pune region and 75%in PMR alone is estimated. A backlog of 9.98 lakh householdswas estimated for the year 2001, 7.19 lakh in the urban areas ofPMR; with an income group distribution of LIG (57.1%), MIG(26.5%) and HIG (16.4%); the figures seem to have under-estimated as per the current situation[Ref: Draft Regional PlanPune ’90-91].Settlement hierarchy- Growth centresAdministratively, the Pune region is divided into 14 talukas & 13 Panchayat Samitis. Theseare Junnar, Ambegaon, Khed, Maval, Mulshi, Velhe, Bhor, Haveli, Purandar, Pune City,Indapur, Daund, Baramati and Shirur (Urban growth centres). Pune city is the administrativeheadquarters of the district. There are around 1,866 villages in this district. Some smallertowns (Rural growth centres) in the region with Municipal Councils are:  Junnar  Pirangut  There is one fast-  Narayangaon  Daund developing village  Khed  Shirur Uruli Kanchan which  Chakan  Indapur is not administered by  Lonavla - Khandala  Walchandnagar any municipal  Bhor  Bhigwan corporation. This  Saswad  Baramati village is having Gram  Jejuri  Talegaon Dabhade panchayat.  Nasrapur  WadgaonHousing statusWith rapidly rising prices of urban lands and difficulties in increasing urban stock due tophenomenally high infrastructure cost, it is but natural that there is huge shortage of urbanland stock. As Pune is on its path of rapid development, steep increase in rate of urbanisationwill follow in-migration, to its urban centres in search of employment, educational and
  3. 3. medical facilities, as well as entertainment and better social interaction. Thus, an increase inFSI to accommodate denser population is not only necessary, but also imminent.Govt. of Maharashtra Housing Scheme from Urban Developmentdepartment (TPS/12901/1450/CR-301/2010/UD-12)In order to facilitate the development of affordable housing scheme by private owners in jointventure with MHADA, the state government has decided to offer higher 2.5 FSI to such jointventure schemes. Considering the feasibility of the scheme, suggestions and objections of thepublic parties, the various points have ascended as discussed ahead.Definition of Affordable HousesThe housing shortages affect mostly the EWS and LIG, affordable houses, for the purpose ofthis scheme, may be taken as houses ranging from about 300 sq. ft. (Super built-up area) forEWS and 500 sq. ft. for LIG at costs that permit repayment of home loans in monthlyinstalments not exceeding 30% to 40% of the monthly income of the buyer. In terms of carpetarea, an EWS category house would be taken as having a minimum 25 square metres ofcarpet area and not exceeding 30 and the carpet area of an LIG category house wouldbe limited to a maximum of 50 [Ref: Maharashtra State housing policy; HousingDept.; Mandatory layout for EWS/LIG/MIG].Development control RegulationsThe policy states a few developmental regulations. The public participatory views someregulations to be explicit for this policy. These are discussed briefly here forth, point wise. The minimum area of the plot as per the govt. policy is 2000 It should be different for urban, rural and various gaothan, zoned not on the basis of TDR, but on the population density criteria inversely (In case of PMC, TDR zone have been decided based upon the then existing election wards, where there are many non-gaothan plots where the FSI is 1 and TDR is not permissible by virtue of they being in ‘A’ zone). The access point existing road widths should be of minimum width of 9m as per the prevailing DCR. The width should be directly proportional to the scheme area. Total permissible FSI shall be 2.5 on the gross plot area (as per scheme). On the Plot, approx. 10% open space and 15% amenity are mandatory as per regulations. The net plot area thus remains 75% and allowing 2.5 FSI on the Gross land area will mean 3.33 times the FSI on net plot area. The height restrictions are 12 to 21m. Considering the restrictions on horizontal spread, the height restrictions should be relaxed. Land slope of 1:5 and below should be permitted as per the sanctioned regional plan of Pune. Also the relaxations in margins and tenement density might be necessary. The mixed land use criteria of convenience shopping and other amenities such as the medical, educational, etc. depending upon the size of the project should be stipulated.
  4. 4.  Development of infrastructure like roads, water supply, sanitation and other amenities near the housing site of an area, higher than a Hectare, through development planning process, facilitated by MHADA funding support for at least the built up above the permissible normal FSI. Due to such a large FSI increment, the number of tenements is going to increase almost three-fold. To avoid the parking catastrophe, as is the case of today, the parking norms, the basement provisions and issues related to the cost of construction increment need to be addressed here. As in case of the township policy, the NA permission needs to be reviewed. This is a time consuming procedure and could be deemed unnecessary for this policy.Construction guidelines: According to the policy, 50% of the FSI over and above basic (normal) FSI shall be utilized by the private owner/developer for construction of EWS/LIG houses for MHADA and handover the same to the MHADA. This rate shall not be more than cost of the construction of tenement. It would only be unfair to rule out the developmental costs, contractor profits and premiums as may be payable to local authorities. Also the procedure or stages of reimbursement by MHADA to the developer need to be stated, perhaps based on the certification of work completed. Also, some concession should be given in case of developmental and other service charges (stamp duty, value added tax, etc.) by the sanctioning authorities. The tenement which will be handed over to MHADA shall not be in a separate building, but in the same building of the free sale tenements. This policy guideline was drawn as to prevent the discrimination of the housing quality or specification. The cost of construction will vary from developer to developer. It could be therefore that MHADA decides on the cost of construction of the tenement as per the DSR of PWD on basis of which the developer will be compensated for the tenements handed over to MHADA. Or MHADA can decide on the specifications for the tenements to be constructed for them. If the above-said is considered, the tenements can be accommodated in a separate building allowing them with a desired flexibility in the amenities/specifications and thus the maintenance cost. As for the transfer charges, this would be efficient for distribution of rights at the time of redevelopment. While deciding the construction rate, the cost of internal land development such as roads, swimming pool, M.S.E.B. connections, Gas connections, street light, drainage line, compound wall, water supply line, landscape, etc. should be considered. This policy states a proviso to levy premium of 5% of Ready reckoner rate. This seems to be a very small amount as compared to the growing needs for infrastructure. Especially in case of bigger projects, MHADA should contribute proportionately towards re- imbursement of infrastructure costs such as roads, sewage treatment plan, water, electricity, storm water drains, etc.
  5. 5. Slum RehabilitationMaharashtra has 10.6 million urban poor population (27% of urban population), largestamong all states and equal to 1% of India’s total population. The Percentage of urban poor tototal poor in Maharashtra has almost doubled (from 24% to 45% between 1977 and 2000).The need for Slum rehabilitation counts to 2.5 to 4 lakh units in Pune region itself. [Ref: StatePlanning Division; Maharashtra State Development Report; 2005].The state initiative is the policy of 25% land reservation for EWS housing (in-situ housing)for the township projects. The rehabilitation projects are normally failing due to no co-operation from the slum dwellers. They sell or rent the rehab houses and establish slums intheir prior location. This has led to a more complex situation in these types of projects.Real Estate Market TrendsSince the recession period, the 2-Bhk housing costs increased considerably. The low costhousing in Pune gained importance. The challenge was to find location and land forconstruction. The price range statistics for budget homes was then set for: 3-Bhk @ 20–25lakh; 2-Bhk @ 12-20 lakh and the rent to 8500-11000 per month for 2-Bhk in IT sector [].But the market ‘lower loan to value ratio’ and ‘sufficient liquidity’ made consumers lesssusceptible to housing crisis. It improved the standard of living, ensured growth of IT andITES sector, rise in mall culture and placed real estate as an investment vehicle. Ever since,the demand for shopping arcades, parks and plazas are increasing. Thus higher taxationlevied by the govt., e.g. Property taxes (30% of sale tax), became eminent.Recently as low cost housing is becoming a priority, the state govt. and also the privatebuilders are taking initiative. Projects such as Kondhave Dhawade and Mont Vert Belair(Bhugaon, Pune) are coming up with a low price range of 2-Bhk @ 20 lakh where normalprices range up to 30-40 lakh. Sterling construction System and Eredene Capital Pic (US jointventure- 100 crore) had an affordable LIG project ‘Tanaji Malsure City’ of 10,000 flats (300to 500 sq. ft. carpet) at Katraj, Pune at price range of 3.5 to 7.5 lakh for Pune residents(2008).Conclusion and InferencesThe housing shortage in the Pune needs to be addressed vigorously if the development is tobe ensured in the right direction. Needless to say in the Pune city the FSI increment hasbecome requisite. But the rural areas too need to be developed in the same fashion as a toolfor decentralisation. Pune region needs to be worked out in a comprehensive way in order toensure its overall and regularised growth. This is very well possible if the above points areaddressed and worked upon.Considering economic, demographic and environmental complementarities that exist betweenrural and urban areas in Pune Region, there is a need to promote rural-urban linkages as adevelopment approach, which posits urban and rural areas as the two ends of the humansettlements continuum. Thus, the rural dimension of sustainable urban development shouldemphasize requisite infrastructure, addressing the challenge of increasing investment in
  6. 6. physical, economic and social infrastructures, for the discussed policy that is supportive ofurbanization. ‘MHADA Controversies: The draft provision of granting incremental FSI for such affordablehousing projects is most welcome being long overdue. Since the repeal of Urban Land Ceiling Actand even before the repeal, the government has been unable to provide sufficient lands to MHADA. Ithas been seen especially in Pune and similar cities that even when lands had been provided toMHADA, virtually free of cost, it has failed to compete with Private developers both in terms ofquality and in terms of cost. MHADA tends to create huge overheads and to load them on tocustomers. Whenever FSI is increased, the basic land prices increase and land owners benefit in long term. Thedraft proposal is creating MHADA as a second landowner, further increasing developers investmentsand costs to end user. The government is unnecessarily attempting to create opportunity for its ownsubsidiary which is presently jobless. By trying to rope in MHADA, an otherwise simple and logicallegislation will get complicated causing procedural delays, increasing corruption and overall cost.’ [Ref: Objections & Suggestions, Hemant Naiknavare Naiknavare Developers Pvt. Ltd.; Pune]References: Pune Regional Planning Board. Draft Report: Regional Plan Pune, Maharashtra 1990- 2011. Maharashtra State Housing Policy; Housing Department.; Mandatory layout for EWS/LIG/MIG; 23rd July, 2007. Maharashtra State Planning Division; Maharashtra State Development Report; 2005. Suggestions and Objections (Public participation): th  M. G. Kulkarni, Suggestions & objections no. 2332, Pune; 13 April, 2011.  Rajendra Nimbalkar, chief officer/Pune board, Suggestions & objections no. 2276, Pune; 8th April, 2011.  Vishal Constructions; Suggestions & objections no. 2223, Talegaon, Shirur Dist. Pune; 6th April, 2011.  Hemant Naiknavare, Naiknavare Developers Pvt. Ltd. Suggestions & objections, Pune; 8th March, 2011.  Credai Pune, ISO 9001 Organisation, Suggestions & objections; Pune 2011.  Vishwas Kulkarni, Architects, Engineers & Surveyors Association, Suggestions & objections no. 1413, Pune; 3rd March, 2011.  Ar. Dharmesh Chevli, Suggestions & objections no. 2223 Suggestions & objections, Pune 2011.  Nayan Shah, Mayfair Meridian; Suggestions & objections no. 1411, Mumbai, 28th February, 2011.  Kalpataru Ltd., Suggestions & objections no. 1383; 3rd March, 2011.  Mandar Barbhai, Suggestions & objections no. 2694; Pune, 4th May, 2011.  Dr. Satyajeet Naik, Naik Hospital; Suggestions & objections no. 2696, Pune, 4th May, 2011. Website: Census 2001, 2011.