Regulation of Real Estate in India

The Housing & Urban Poverty Alleviation and Tourism Minister Kumari Selja has said that the Government is working on a model Real Estate Regulation Bill to provide guidelines to facilitate growth and promotion of healthy and transparent, efficient and competitive Real Estate Sector in the country. Inaugurating a conference on Affordable Housing for Urban Poor she said the India Real Estate Market is unorganized and fragmented and most of property transactions are based on certain perceptions and not necessarily on the sound business principles. The customer satisfaction is low and the procedure for redressal is long and cumbersome. She said some of these problems could be addressed by rating the Builders and Developers.

She said Ratings are a means to inculcate business ethics in product development and delivery. Kumari Selja said evolving a rating system will bring customer focus and help in building a brand image. The Minister said Rating of a project or developer builds confidence by ensuring that a reasonable quality product is delivered in a specified time and within the specified price range.

Assuring all the stakeholders that the government of India will provide its full cooperation and support to encourage, guide and strengthen the efforts for making ‘affordable housing for all’ a reality, Kumari Selja said the Housing Sector in India holds tremendous potential and has positive impact on the social and economic development of the country. She said, in 2006-07 this sector contributed about 4.5% of country’s Gross Domestic Product and comprised approximately 7% of the total urban workforce. She said housing is the largest component of the construction sector and central to economic growth and the related multiplier effects on employment, poverty reduction etc. However provision of “affordable housing for all” is a complex problem with challenges emerging from many facets of urban sector. The Minister said there are many impediments to the growth of affordable housing-land and capital being the two key constraints. She said finding land in our bursting metropolises to house the growing number of urban poor is probably one of the greatest challenges that our city planners face, and innovative solutions are the need of the hour. To increase the stock for affordable housing the focus has to be on augmenting land supplies. She said the issue is a critical one and requires a number of measures such as alternative methods of land assembly, development and disposal to be pursued, check on prices of urban land, encouraging Public-private partnership, promoting intense use of land higher densities, revision in Floor Area Ratio or Floor Space Index and change of norms to suit local situations, discouraging speculation in land development and allotment or disposal process to check rising prices of land.

Kumari Selja said in order to enable financial inclusion of economically weaker sections, her ministry has constituted a committee to explore, examine and recommend setting up of a dedicated micro-finance company with focus on micro-housing finance. The committee will also examine the existing rules and regulations governing the functioning of the micro finance institutions, and suggest any changes that may be required to permit the micro-finance institutions to successfully provide housing loans to the poor in the informal sector.

She said public housing agencies have been finding it difficult to provide affordable housing options to the poor due to non-availability of land at suitable locations at reasonable price and lack of clarity on property titles. The private sector must come forward to take up housing programmes for the poor and low-income groups with social commitments.

Kumari Selja said, the important initiatives taken by the government in the field of housing are the National Urban Housing and Habitat Policy (2007), JNNURM and two schemes-interest Subsidy Scheme for Housing the Urban Poor and Affordable Housing in Partnership launched in February 2009.

State governments have notified regulations for reservation of land for EWS scheme housing in all new developments. Presently about 80% of the JNNURM housing is being provided by conferring entitlement in-situ and making provision for up-gradation of infrastructure in existing slums.

The Minister said, to achieve government’s vision for inclusive growth the Government of India in June 2009 introduced Rajiv Awas Yojana for the slum dwellers and the urban poor. She said, the schemes for affordable housing through partnership and the scheme for interest subsidy for urban housing would be dovetailed into the Rajiv Awas Yojana which would extend support under JNNURM to states that are willing to commit themselves to the vision of a slum free state will be assisted to draw up a state plan of action to proceed towards these goals in a systematic and time bound manner.

The Minister said Rental Housing is also an important component of affordable housing. Rental Housing is a feasible and affordable option not only for the poor but also for newly formed households, young persons and mobile populations. She said, at present Rental Housing is offered only by the households. Corporate sector do not invest in Rental Housing. There is need to encourage investment in Rental Housing not only for the lower-income groups but also for the middle and higher income groups. Kumari Selja said incentives are required for encouraging lending by financial institutions, HFIs and Banks for Rental Housing. Also Companies and Employers must be encouraged to invest in the construction of Rental Housing for their employees.

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