For years, a foremost hurdle in the growth of real estate industry has been slow approvals and delayed certifications by the government. After thorough documentation and rigorous follow-ups, a real estate developer has to take almost 50 different permissions and NOC (no objection certificates) with each such permission taking almost several months to come along.
Right from the acquisition of land to the final delivery of the project, the entire project takes up to several years, incurring major loss of time and money for developers, all resulting into frustration and loss of trust meted by the buyer.
The central government passed the Real Estate Regulation and Development Act (RERA) last year. RERA will ensure transparency by builders with stringent provision for penalty in case of delays; however the act lacks a strong measure to pressurize authorities to deliver timely approvals, which have been discouraging industry players to venture forth.
But the face of real estate industry is about to change, ever since infrastructure status has been accorded to affordable housing segment, the government has opened up new avenue for business growth of realty sector across nation.
Under the infra tag, the affordable housing developers will now be eligible for several government incentives, subsidies, tax benefits and most importantly institutional credit, thus encouraging developers across nation to tap the opportunity as a lucrative option. Over and above the obvious benefits attached, a new ray of hope is the expected acceleration in approvals and easy land allotments.
Under the scheme, NHA has announced to refinance individual housing loans of about Rs 20,000 crore in 2017-18. Jumping on the bandwagon private banks experiencing surplus liquidity as an effect of demonetization has already reduced their home loan lending rates.
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To promote affordable homes, the government also proposed to amend the Section 80-IBA, increasing the period of completion of the project from the current 3 years to 5 years. The allocation under the Pradhan Mantri Aawas Yojana-Gramin was also increased from last year’s Rs15,000 crore to Rs 23,000 crore.
From the facts above, it can be concluded that the government is determined to make PM’s vision of ‘Housing for All 2022’ a success, by lending support from all directions. The scheme can prove to be a driver for the sustenance of real estate industry; therefore, developers eye affordable housing as a lucrative venture for growth optimization.
Post demonetization the real estate industry has suffered a slump due to the lack of cash flow and stringent policies of loan approvals. Industry has witnessed huge downturn from buyers of luxury and commercial segment as overall economic dynamics has gone downhill.
Mr. Anubhav Aggarwal, Managing Director at one the Mumbai top realty company, RNA Corp said.”Today in India, a primary demand for property buyers is seen from young couples looking at expanding their family, but there exists a significant gap between the cost of housing and annual incomes making homeownership seem improbable, if not impossible. This gives way to affordable housing sector to make an Indian Dream Home a reality, by producing lakhs of units under the scheme.
“The need of the hour is quicker clearances by the authorities, however till that materializes, the infra tag will offer a stress-free land allotment specifically for the purpose of affordable housing development.” Mr. Aggarwal said.
The company RNA Corp. itself have produced affordable housing units in Mira Road in the past and is planning to convert its existing land parcels in the outskirts of the MMRDA region under the affordable scheme.