To market, to market, to buy a small flat...

There was a time when a six-figure salary meant you could buy a buy a house, a luxury one at that, in the heart of Delhi or Mumbai. But the property boom has turned that into a pipe dream. Everyone, except the very rich and the middleman, has been priced out of the metro market.
Anyone with a take-home pay of one lakh and more has been forced to the outskirts of Delhi or Mumbai.The rest pin their dreams of owning a home in one of the subsidized apartment blocks constructed by government agencies such as the Delhi Development Authority (DDA) and the Mahrashtra Housing and Area Development Authority (MHADA).
But do these subsidized DDA and MHADA flats really help the deserving-but-poor 'middle class' to own a home in the city they work? Not really, as most of these reasonably priced flats end up in the hands of property agents and speculators who resell them at a huge profit, thereby pushing property prices higher, unwittingly creating a price spiral.
The subsidized flats are greatly in demand. When DDA announced 5,000 flats for sale in August, an estimated eight lakh people applied. There is the same eagerness in Mumbai. The authorities expect at least three lakh applicants for the 600 budget flats MHADA will announce in early December.
But there is little to show subsidized housing helps the people it is meant for. Sanjay Verma, South-East Asia, MD of Delhi property consultancy Cushman & Wakefield, says, "Part of the problem lies in the absence of a mechanism to establish the economic profile of a person. Unlike in the US, where you have a social security number, and everyone files their taxes, in India with rampant tax evasion, one can't make out who is a genuine buyer."
It was this conundrum that led former Urban Development minister Jaipal Reddy to suggest that DDA flats lying vacant after completion of sale be auctioned. Reddy's idea did not go down well with DDA officials, but it had undeniable logic on its side. Reddy argued that the low price set by DDA for the flats was leading to mass speculation, which only helped the rich get richer. It was also clear that most of the flats were resold within a few months of allotment and the majority of allottees were not the deserving poor urban worker but speculators.
That's something neither DDA nor MHADA denies. A MHADA spokesperson said, "Though we do our best to ensure the applicants are genuine buyers in need of a house, we wouldn't say we've been able to keep out fraudulent buyers."
As things stand today, any citizen of India, who can furnish an affidavit saying they don't own a house in the city, is eligible to apply for subsidized housing. But experts say these simple rules are riddled with loopholes. "People can apply in their relatives' names too and the DDA has no way to check this," says Verma.
MHADA has tried to address some of the more blatant aspects of profiteering from subsidized housing. It has a lock-in period of five years before allottees are allowed to sell their flat. This is meant to ensure that people buying the flats do so for the purpose of living in them. But DDA has no such law. "All our property is freehold and the allottees can resell it any time," admits DDA spokesperson Nemo Dhar.
Praveena, a Dwarka housewife, who applied for a DDA flat in August, says, "If DDA is serious about its social responsibility, it should prohibit reselling of its flats to anyone except itself."
Verma says the problem needs to be tackled from the supply end. "Speculators jump into the race because there's a huge shortage of affordable housing. A better way to deal with this mess is to ensure there's adequate supply of such housing in India at any given point in time."
According to government estimates, India is currently short of 19-20 million houses and 75% of this is in the mid-income sector. Verma says little has been done to address the shortage and it is compounded by high land prices, which render it unprofitable for private builders to construct affordable housing.
In the meantime, though, as demand continues to outstrip supply, the DDA is laughing all the way to the bank. It earned a whopping Rs 12,000 cr in registration fees alone because each of the 5,000 flats on offer attracted 250 eager applicants. The DDA will return the Rs 1.5 lakh registration fee to each unsuccessful applicant after three months but by then, it will have earned Rs 250 cr in interest. But, hardly anyone other than DDA and speculators really profits from each subsidized housing scheme.
amrita.singh@timesgroup.com