Investing In Affordable Housing: Opportunities And Challenges In India
By Investoxpert | 12 Oct 2023 | Real Estate
Affordable Housing In India is being supported by the government's push for home ownership (under the PMAY program) and the expansion of credit options
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Companies that specialize in housing financing and target this market are logical winners from this expansion possibility. Long-term growth ambitions, however, ignore scale-related difficulties including increased competition and operational rigor.
What Is Affordable Housing In India?
Affordable housing is referred to the homes that are within the reach of persons with a low to moderate income. Millions of people in India currently live in slums or in subpar homes, which unfortunately presents a difficult housing situation.
This is especially true in cities, where the housing market has been under tremendous pressure due to increasing urbanization and population increase.
To solve this problem and give those who live in poor conditions a better quality of life, affordable housing is crucial.
Affordable housing projects are essential for fostering social and economic growth by giving families permanent homes, lowering poverty, and expanding access to healthcare and education.
What Is Affordable Housing Scheme In India?
The Central Government and the State Governments have worked together to implement a number of affordable housing programs in India during the past few years. The goal of these programs is to fulfill the "Housing for All by 2022" ambition. It is one of the major Reasons to invest in property.
Such housing policies are made expressly to help lower- and middle-income groups of people buy homes more easily and affordably. For qualified residents purchasing or building a home with basic amenities like water and electricity, these policies offer rebates on home loan interest.
List of 7 Affordable Housing Schemes by Government in India
- Pradhan Mantri Awas Yojana (Urban)
- Pradhan Mantri Gramin Awas Yojana
- Rajiv Gandhi Awas Yojana Housing Scheme
- Delhi Development Authority Housing Scheme
- Tamil Nadu Housing Board Schemes
- Maharashtra Housing and Area Development Authority Lottery Scheme
- NTR Housing Scheme
The government programs described above will assist a person in purchasing a property by granting discounts on mortgage loans or lowering mortgage interest rates. Compare the affordable housing programs in India for 2022 and select the one that best satisfies your needs.
What Is Affordable Housing As Per GST?
The Affordable Housing Scheme was introduced by the Government of India (GoI) in June 2015 in an effort to meet the housing needs of households with lower and intermediate incomes. Affordable housing units are eligible for reduced Goods and Service Tax (GST) rates than typical residential housing, which is a significant benefit to the buyer of an affordable home at the time of home purchase.
A home buyer must pay GST at the time of purchase, according to property tax and investment experts, but it's crucial for them to understand what an inexpensive house entails under the GST.
Challenges For Affordable Housing
• Stress on Current Infrastructure
According to statistics, metropolitan India will experience a massive population increase, and demand for housing would skyrocket by 2031, a staggering 59% increase over 2011. The present infrastructure will be put under pressure as more and more urban residents hunt for housing.
LIG sector residents live in cramped conditions due to a lack of housing options, low income, and limited access to house financing. If the issue is not adequately and promptly resolved, it will hasten the spread of unplanned and unsustainable urbanization.
- Land availability is simple
To encourage the construction of affordable homes, the government should issue land parcels on a regular basis. It can be located within blocks and municipal boundaries, bringing additional outlying properties under the city authorities' allowable development restrictions.
- Being Innovative while struggling with mass production
To cut building expenses, several developers use creative engineering design and include it into the engineering process. Although it works best for a single house or at the very least a small neighborhood, it is nevertheless highly successful. It is much more challenging to implement innovation on a scale of hundreds of thousands of homes.
• Financial support for subsidiary infrastructure
Although the government places a lot of emphasis on land parcels, this cannot be the only factor that enables cheap housing. Focusing on establishing the required social infrastructure and connectivity is equally important. This will enable these low-cost housing developments to grow into liveable towns.
- Strengthen Micro Finance
To enhance the institutional environment and enable lower-income groups to access housing microfinance and other financial tools, financial assistance is required and must be implemented along with Affordable Housing Scheme. These microfinance firms will aid low-income buyers who are primarily looking for credit to purchase homes during the loan approval process.
Opportunities for Affordable Housing Sector
- Government Support for Affordable Housing In India
Over the course of seven years, the Indian government has set the goal of building 2 crore affordable homes. These homes are intended for people with lower incomes, and the PMAY (Pradhan Mantri Awas Yojana) program was created for this purpose. For developers who are concentrating on affordable housing projects, this funding is essential.
- PPP in Affordable Housing Sector
PPPs are essential to the advancement of projects including affordable housing. Various governmental entities, including the federal and state governments, private developers, financial institutions, urban planners, and city residents, are among the stakeholders.
As a result, there are Real estate investment opportunities for growth and consequently profit in both the commercial and public sectors. Planning and design, project development, technology, human resources, and sales and marketing are all majorly produced by the private sector. The public sector, on the other hand, considers time-bound clearing, taxes, and various perspectives to reduce the cost of homeownership.
- Enabling Ecosystem And Optimal FSI
The government has already put policies, plans and various Affordable Housing Scheme in place to boost urbanization as well as rural communities' income and aspirations. To gain momentum without disrupting the rural indigenous ecosystem, a balanced strategy must be used. In this regard, a supportive ecology can promote sustainable urbanization and provide for the needs of the underprivileged.
The FAR (Floor Area Ratio), another name for an ideal FSI, can reduce per-unit costs and improve the commercial viability of inexpensive housing. In order to convey the benefits on to end users, many experts also recommend cashless subsidy as FSI. There are additional fees that can be decreased, like sales tax and registration fees.
Conclusion
Everyone needs a home, but it is exceedingly difficult to make this a reality in India without careful planning and strong leadership from both public and private organizations.
Now, you better know about “What Is Affordable Housing Scheme In India”, challenges and opportunities in affordable real estate.
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