The document discusses various obstacles in housing in India. Some of the key obstacles mentioned are: 1) Pressure on land resources due to urbanization which leads to issues around land sustainability and availability. 2) Lack of adequate funding for housing development and poor infrastructure. 3) High poverty levels which exacerbate housing problems. 4) Constraints around bank credit, high land costs, and lack of involvement from the private sector which makes housing inaccessible for low and middle income groups.

1. Obstacles in Housing
Ravi Sharma

2. Effects of Urbanization
• Pressure on land resource, particularly agricultural land
for conversion
• Land Sustainability
• Adequate Funding Resource
• Urban Governance and Management
• HOUSING PROBLEMS
• Poor Infrastructure
• Poverty

3. What They Say …
• India’s urban population registered a decadal growth of
32 percent rising from 285 million to 377 million
between 2001 and 2011 - Census of India 2011
• By 2050, 900 million people will be added to Indian
cities - Urban Infrastructure in India, FICCI
• The shortage, prominent within the EWS and LIG, was
estimated at 18.78 million households in 2012
- Ministry of Housing and Urban Poverty Alleviation
• India needs to build 30K units daily for 8 years to meet
housing needs - KPMG Report 2014

4. Urban Population
• India’s urban population has grown at a CAGR of 2.8 percent over
2001-2011, resulting in an increase in the urbanization rate from
27.8 percent to 31.2 percent (census 2011)
• Over 2014-2050, the pace of urbanization is likely to increase at a
CAGR of 2.1 percent – double than that of China (Report of the Technical
Urban Group)

5. Agencies Involved
Housing Industry
Institutional Framework Acts & Regulation Policy Framework
Central State Central State Central State
- MoUD
- MHUPA
- Government
Housing Finance
Bodies (HUDCO)
- JDA
- RHB
- PWD
Etc.
- Ownership of Land
for Development
- Nature of
Development
- Operations of
Developers
- Earnings and Profits
of Developers
- Rent Control Acts
- Urban
Development Acts
- Rajasthan Urban
Improvement Act,
1959
- NUHHP
- JnNURM
- IHSDP
- FDI
- Rajasthan
Affordable
Housing Policy

6. Roti, Kapda aur Makaan
• The real estate sector is a critical sector of our economy.
It has a huge multiplier effect on the economy and
therefore, is a big driver of economic growth.
• It is the second-largest employment-generating sector
after agriculture.
• Growing at a rate of about 20% per annum and this
sector has been contributing about 5-6% to India’s GDP.
• Not only does it generate a high level of direct
employment, but it also stimulates the demand in over
250 ancillary industries such as cement, steel, paint,
brick, building materials, consumer durables and so on.

7. Roti, Kapda aur Makaan
• If the total population of about 1200 million population
is divided by 5, the average number of members in a
family, the country requires housing for 240 million
families.
• Of this, 2.4 million around 30% are either house-less or
live in thatched collage or houses made of tree and plant
live in and bamboo and mud houses.

8. Causes
The requirement of house building is a massive program
and the Indian Government is aware of it but cannot do
much about it because of the following reasons:
• Lack of investment and funds.
• Lack of building materials like red bricks, timber, steel sections,
flats, angles, rods etc. as well as glass, tiles, sanitary-wares and
cement and sand, as well as lime and plaster.
• Lack of a definite housing program.
• Non-availability of low cost housing ideas to be built for village and
rural areas.
• Vacant Plots
• Poor Planning
• Soaring Rents

9. Obstacles
• Land acquisition
▫ The inclusion of real estate industries like tourism and housing (for
unspecified income groups) as public purpose makes a mockery of the
concept. It also so happens that every single one of these other
“infrastructure” activities is now being undertaken for profit by private
companies through the PPP model. Often they are allowed to undertake
real estate development on excess land abutting the infrastructure.
▫ The LAA amendment would thus give clear legal sanction to taking land
from farmers and giving it to private players for real estate profiteering.
To take another example, many SEZs (which are largely real estate
projects) are being built through joint ventures between state industrial
development corporations and private companies.

10. Land Acquisition as obstacle
in Housing

11. Obstacles
• Land acquisition
• Lack of Transparency
• Constraint on Bank Credit
• No specific agency to monitor and control rent
• Inadequate provision of both government and private
sector house
• High land cost
• Private housing getting inaccessible to LIG and MIG
• Lack of private sector involvement and participation
• Lack of stable, sustainable and viable long and medium
term home financing

12. Obstacles
• Lack of Transparency
▫ The industry should work towards increased transparency, clear
land titles, improved delivery and project execution while on the
other hand the Government must provide fiscal incentives to
developers to build low cost and affordable housing for the
masses and also review the existing FDI guidelines for
investment and development in Indian real estate in order to
increase the flow of foreign capital into the sector.
• Stamp Duty
▫ Consumers should also be given reduction in stamp duty for
opting for green development.
▫ Some of other initiatives which could benefit the developers as
well the end consumers would be lowering & standardization of
stamp duty across the country as well as reducing transaction
burden. The introduction of unified taxation system across all
states will also help to incentivize more consumers for home
ownership.

13. Obstacles
• Constraint on Bank Credit
▫ Another important constraint that has been existent all along for
the housing sector is finance for the developers as well as finance
for the households, particularly for the low cost/affordable
housing category.
▫ The current financing mechanism prevalent in the country
mostly targets middle and high income sections of the society
while the households falling under low income and economically
weaker sections category find it difficult to secure formal housing
finance. Commercial banks and traditional means of housing
finance typically do not serve low-income groups, whose income
may vary with crop seasons or is below the ‘viable’ threshold to
ensure repayment or those who cannot provide collateral for
loans.

14. Obstacles
• No specific agency to monitor and control rent
▫ The proposed reform was introduced in the form of the Model
Rent Control Legislation in 1992, yet only five states have
implemented the same. The only upside is that about ten states
have proposed bills as of 2010
▫ Rent control comes under the states legislative competence,
therefore it has to be reformed by the states themselves.
• High land cost
▫ At present, there is a shortage of 187.80 lakh dwelling units in
urban areas, but this is not attracting developers to take up low-
cost units as the sector is facing many challenges on the land
acquisition front, soaring land and material cost and liquidity
issues, say experts.

15. Obstacles
• Private housing getting inaccessible to LIG and MIG
▫ low-cost project or mid or high-income, the cost incurred in buying
land and construction is same, but the returns are very low. This
condition does not attract private developers and thus they see HIG
housing project as a profitable deal.
• Lack of private sector involvement and participation
▫ flow of funds to the affordable housing segment of the real estate
sector is dismal and there is need to incentivize and encourage
private sector participation in affordable housing for the urban
poor.
• Lack of stable, sustainable and viable long and medium term
home financing
▫ Banks lend at around 18 per cent while PEs (private equity) expect
returns of up to 23 per cent. Thus in a project which is costlier than
its returns, financing them becomes a major challenge

16. Obstacles
Impact of Budget 2013
• Capital Gain Tax Exemption
• Boost to Infrastructure and Construction
• Service Tax Increase
Credit Crisis
Home Owner Mortgage broker
Mortgage lender
Mortgage
Investment Banker
Housing prices rises practically
Buys the mortgage from
lender at a nice profit
• Home owner lend money from lenders and get
a house
• Investment banker borrows money and buys
lots of mortgages
• Banks started receiving a lot of money from
home owners (installments)
Down
Payment

17. Thank U