High property rates put homes out of reach

PUNE: The housing requirement for the lower and middle income groups is around 40 per cent, but with the high rates and the unavailability of small houses, decent and legal affordable housing has remained an unfulfilled dream for many.
According to the housing study by Mashal, "Past efforts at addressing this issue have been fragmented, reactive, and narrowly focused on symptoms rather than root causes.There is the general trend amongst developers to build larger and more expensive dwelling units, which tend to be more profitable.
Using the general rule of thumb that one can afford a home no more than four times one's annual income the formal housing market only caters to the needs of those earning Rs 2 lakh or more per annum. An entry-level home in the Pune metro area starts in the range of 8 to 10 lakh. The problem of lack of affordable housing for those who want to buy but have meagre or modest means, is compounded by the virtual lack of affordable housing on a rental basis other than in slums for those who do not have either the future stability or the down payment required to own a home," the report states.
Satish Magar, president of the Confederation of Real Estate Developers' Association of India (Credai), Pune, refuted the claim that larger dwelling units are constructed for profitable reasons.
"The biggest hurdle in high property rates is the high land cost. There is a short supply of land because the Development Plan for Pune has still not been sanctioned. Once that is sanctioned, a lot of land will be opened up and land costs will go down. Also, cross subsidisation of land cost needs to be done," Magar said.
He pointed out that high taxes levied by the government and urban local body is another reason why property tax is high.
"These taxes are nearly 30 per cent of the sale cost, so if they are brought down, property rates can come down to that extent. Secondly, the paid Floor Space Index (FSI) should be explored so that potential of land is increased," Magar said.
Meanwhile, the Maharashtra Housing and Area Development Authority (MHADA), a government body established in 1977 with a view to extend fair housing opportunities to residents of the state, has been facing problems in the last couple of years to construct affordable housing at a fast pace.
Rajendra Nimbalkar, chief executive officer of MHADA, Pune, said that measures are in the pipeline for development of affordable houses.
"The government is soon expected to finalise the 2.5 FSI policy for Pune and Pimpri Chinchwad. This policy will also be applicable to all MHADA lands and colonies. It is aimed at creating new affordable houses," Nimbalkar said.
Another important policy that is set for approval is the Joint Venture with private developers, which will also help in generating housing.
"Private developers who are ready to go into a Joint Venture with MHADA can avail of 2.5 FSI for constructing affordable housing on private lands. This will go a long way in encouraging private developers," Nimbalkar said.
The delay in these policies, which have been sanctioned for all of Maharashtra except Pune and Pimpri-Chinchwad, has held up numerous projects of MHADA, aimed at LIG housing.
BOX:
Future housing requirement for different income groups
Income Group % Distribution HH units in nos.
EWS 44.14 2,90,873
LIG 20.03 1,32,022
MIG 26.24 1,72,977
HIG 9.58 63,103
Source: Primary Survey, Mashal, Pune
Reasons for lack of affordable housing
High land prices
Increasing construction cost
Various taxes and duties charged by government
Delay in sanction of DP leads to land shortage.