By N.G.P. Nair
Here is a wake up call to the governments both at the state and central level to come to the rescue of genuine seekers of living accommodation particularly in the metros. The grievance is that he builders are jacking up prices to sky-high at any given opportunity without rhyme or reason with an accompanied posture, take it or leave it. They very well know that the demand is more than the supply and a laissez-faire operation can continue until and unless intercepted. Only our government alone can enact the required law leading to a control of the accommodation prices and thus bring builders’ lobby to come of their senses.
Control on distribution : As all of us know that our authorities have taken or are taking corrective measures from time to time for the common good of the people when scarcity surfaces in any other segment. For example take a look at the situation with food grains, cooking oil, clothes, kerosene and many others essential household items. On one side the government ensures adequate supply and on the other declares a fair price to make these items available and thus get them within the reach of the common man. Evidently the government safeguards us from getting exploited by the unscrupulous traders by issuing ration cards. But the system is in place and continues as a defense mechanism against exploitation.
A fair step (ULCR) : The Central Govt. in all fairness repealed the act of ULCR (Urban Land Ceiling Regulation Act) to ensure equitable distribution of surplus land in Mumbai, the land meant for constructing houses for the weaker sections of the society. Surprisingly, the Maharashtra Govt. has so far not implemented the central government order for the reasons best known to them. Naturally, the lower middle class and those below that level for whom such houses are supposed to be constructed and allotted using such surplus land are deprived of. An individual is eligible only for 500 to 1500 sq. meters of such land and the remaining area is treated as surplus land. This excess land should go for the benefit of the weaker sections. The builders and trustees who hold several acres of excess land under the purview of this Act in Mumbai are doing a day light robbery, evidently to the detriment of the weaker sections.
Interest rebate for IT on Housing Loan : No doubt our governments have done quite a bit to giving us the facility in buying accommodation. To the specific the finance ministry incorporated new rules in the Income Tax Act about tow years ago, thereby giving more incentives to housing loan seekers. The market prices were stable in those days as only genuine purchasers alone were involved in booking of flats and other premises in Mumbai.
Stamp Duty slashed : The Maharashtra Govt. slashed the stamp duty on housing transfer documentation from 10% to 5% as applicable to property valued at Rs. 5 lacs and above effective 1st of September 2005. And for commercial and freehold land the govt. out rightly brought down the stamp duty from the then prevailing 10% to 5%.
Of course a good number of accommodation seekers took timely advantage of our government’s largesse. But alas! This new situation had its backlash as smart operators found this to be a good investment proposition with hardly any risks and side by side prices started moving upward this flagged off the initial boom in the real state market and builders, even the reputed ones said bye-bye to all business ethics and started boosting up the prices as the demand continued to be more than the supply.
Employment of heavy pay package : Take a look at the demand side. Popularly known as the gold rush the IT and IT-enabled industries besides their close ancillaries generated employment opportunities of an unprecedented nature. This enabled the upward mobile qualified youngsters popularly known as yuppies to land jobs at a heavy pay package in the metros. This situation created a huge amount of disposable income a large part of which has entered the housing market.
Limited supply of housing :
Certainly we welcome this healthy trend as it further upgraded the requirements in housing accommodation in places particularly in the metros like Mumbai, Pune, Delhi, Kolkata, Bangalore and Chennai. But unfortunately this resulted in the prices of accommodation to shoot up almost double since a year and a half as the demand went spiraling against limited supply. Perhaps the builders during this period have had to pay an increase of ten to fifteen percent or less for the throughputs like the cement, steel, sand etc., that go into the construction but it there is no justification to boost the prices to unreasonable levels, say double or even triple. This is pure exploitation, call it racketing in the worst form. Government has to take heed of this situation and take immediate remedial measures.
By N.G.P. Nair