Understanding ‘affordable housing’
March 10th, 2017
The announcement of the Pradhan Mantri Awas Yojana (PMAY) scheme marked the beginning of the shift of focus to low-income housing. Earlier known as the ‘Housing for All’ scheme, this proposal aims at maximizing housing facilities to Indians across the spectrum. As the phrase indicates, this segment refers to a segment of properties that are reasonably priced. But with affordability being subjective, let’s examine what exactly goes on to classify a property under the ‘affordable’ bracket.
The Housing and Urban Development Corporation Limited’s (HUDCO) definition of affordable housing states that the cost of an affordable house should not surpass five times the domestic gross yearly income of an individual and the EMI/rent should not exceed 30 per cent of the household’s gross monthly income. With the annual income varying across factions of society, it holds different meanings for different sections of demographics. This category of accommodation is designed to cater to people from lower income segment. The sense of security that comes with owning a house not only enhances brand India globally but also catapults the country on the global development index.
The Ministry of Housing and Urban Poverty Alleviation classifies an annual income upto 1 lakh under the Economically Weaker Section (EWS) and those between 1 lakh and 2 lakh under the Lower Income Group. What kind of credit facilities will be offered to this group to own a house, and more importantly, what kind of developers will be drawn towards the construction of “quality” affordable homes is a question at large. While people from the EWS and LIG classes are key to a country’s socio economic development, one needs to bear in mind the quality of unit that is being offered. The residence needs to have the comfort and security of a self-owned property that the audience above the ‘affordable’ slab enjoys.
The Government’s scheme of Housing for All by 2022, gave us a reason to smile, and therefore, the conferring of industry status to affordable housing was hailed by Indians as a step in the right direction. However, proliferation of affordable homes intertwined with realization of Housing for All by 2022, requires careful planning and rollout, realistic phases of implementation and incentives given to established realtors to help realize this mission.
The cost effective housing which is priced at Rs. 1.5 lakh is not remotely close to the definition of affordable housing that eminent developers vouch for. Easy availability of finance options, lower interest rates, bigger market and plenty of incentives for developers are therefore required to gravitate market players to the affordable housing segment. Also, in wake of rapidly expanding middle class and migration to urban cities, the manner in which affordability is defined and expanded to encompass this section, especially in the context of rapid urbanization, is yet to be seen.