Mirage of affordability

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While the state government has been projecting the new housing policy as a major thrust for affordable housing, the high rates fixed for different cities will, in fact, jack up the prices much beyond the affordable range

“Crawl when asked to bend” — this seems to be the mantra of the Hooda government when it comes to giving incentives to the recession-hit real estate sector in the state. This sums up the ‘Affordable Housing Policy—2013’announced by Chief Minister Bhupinder Singh Hooda recently to facilitate the creation of additional housing in urban areas across the state.

While the Haryana Government may claim that the new policy is “intended to encourage the planning and completion of group- housing projects within a targeted time-frame to ensure the increased supply of affordable housing”, a closer look at the policy reveals that apartments under the policy would hardly be affordable for a common man. Moreover, while the aam aadmi is not likely get affordable houses, the builders in the recession-hit realty sector may be laughing all the way to the bank.

The rate of the dwelling units would be a major dampner for the investors and the end users. While ~ 4,000 per sq ft would be the rate for Gurgaon, Faridabad, Pinjore-Kalka(Panchkula), ~3600 per sq ft would be the rate for other high and medium-potential towns and ~3000 for low-potential towns.

Translated into simple language this would mean that a modest I BHK with a covered area of 500 sq ft in Gurgaon, Faridabad and Panchkula will cost about Rs 20 lakh.

The price for other towns such as Karnal, Panipat and Bahadurgarh will be Rs 18 lakh, while for small towns such as Yamuna Nagar, Jind and Safidon it will be Rs 15 lakh.

Advantage builders

This sort of rationalisation of the pricing of housing units will be a virtual bonanza for the builders who are also being offered several other incentives, including exemption from licence fees, infrastructure development charges, FAR of 225 instead of the current 175, a higher ground coverage of 50 per cent against 35 per cent. All of these together would make the realty sector an attractive proposition once again for the builders.

“The new rates and incentives would go a long way in reviving the sluggish realty market. In fact, it seems to be a virtual bonanza for the developers ahead of the parliamentary and state Assembly elections,” said Manish Goyal, Director of a Delhi-based firm that has projects in the National Capital Region (NCR).

According to experts the rates fixed by the government are certainly on the higher side particularly when the real estate sector is battling severe slowdown for the past several months. The rates fixed by the government would be taken as a benchmark by the builders while selling the apartments even in their other projects and this will surely mean higher prices being demanded for mid segment residential units, observers opined.

Builders getting their projects passed under the new policy are going to be the main beneficiaries. For an acre of land, the builders will now get the FAR of 225 instead of present 175 meaning that 225 flats can be constructed on an acre as against 175 earlier. Not only that the ground coverage could be 50 per cent as against the current 35 per cent. More ground coverage would mean that the promoters would be able to utilise the spare area in the project for commercial purposes as some specific commercial component has been allowed in the policy. While commercial segment may also provide shopping centre facilities for the residents, the ultimate beneficiaries of the relaxed norms would be the builders, who would sell the commercial spaces at the market price.

The lower charges and fee as compared to the other projects would also ensure greater profit for the builders despite claims to the contrary by the Haryana government.

The end users are also dismayed at the high rates fixed by the state government. “This is clearly an attempt to push the affordable housing out of the reach of the common man. In the pre-election year, the Hooda government is bent upon helping the big builders and is, in fact, fleecing the middle and lower middle classes,” alleged Mangat Singh, an employee with a private sector firm.

Fact File
-Exemption from licence fees, infrastructure development charges
-FAR of 225 instead of current 175; a higher ground coverage of 50 per cent as against 35 per cent at present.
-Four year limit for completing the project.
-A commercial component of 4 per cent allowed in the project.
-Projects allowed on 300 acres in Gurgaon, Faridabad and Panchkula. 150 acres in Sonepat, Panipat and Karnal, Dharuhera, Bahadurgarh and Sohna.

Builders lap up the policy

The “builder-friendly” affordable housing policy, has been a hit with the builders. As many as 56 licence applications have been received by the state government from various colonisers since the announcement of the policy five days back. Out of these, 40 applications have been received from builders in Gurgaon, 8 applications for Sohna, 6 for Faridabad and one each for Jhajjar and Karnal.

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