(Un)Affordable Housing: What makes it so?

By Accommodation Times Bureau

It is a constant matter of concern for people to buy a house that is affordable such as to fit into their pre-requisite budget. There is a sharp difference between affordable housing and low-cost housing. Low-cost housing is constructed for economically weaker sections of the society. And
Affordable housing is for the lower income group or for the lower middleclass category.

Generally, the developers give more weight-age to luxurious and high end projects rather than the affordable and lower end projects. But now the scenario is changing, the developers do look forward for opportunities that can prove viable for private real estate players in terms of affordable housing section. However, it is limited as of now.

Here are some factors that could make housing unaffordable:

Land: It is the basic amenity as far as housing is concerned. No construction is possible without acquiring land. We see a lot of green patches of land from air, which may seem available but they aren’t. It is because India is an agrarian country and the 70% of land is cultivable land. The metro cities suffer from lack of available land the centre of the city. Though we can find land in the suburbs. Due to increasing demand and lack of supply of land, the prices of lands sky-rockets to the ultimate possibility. Redeveloping slums, under the SRA scheme, will help build millions of both affordable and low-cost homes. Making slum areas more inhabitable will also attract

Lower FSI: FSI is the ratio which determines how much floor space you can have as a proportion of the land area. Mumbai happens to have one of the lowest FSI ratios in the world. Hence the builders have limited area that they can construct and accommodate people. Many builders add on FSI by buying transfer of development rights (TDR) from the market.

Public Private Ownership: The affordable housing segment will receive a huge boost if there is a mutually beneficial relationship between public and private sector for the same. If both public and private sector work cordially things can be more effective in terms of construction which also depends on factors like cement, steel, labour(whose costs always go up with the passage of time). It is necessary for a site to be developed at a pre-decided time.

Single window clearance: The biggest challenge one face as a developer is the amount of time it takes to acquire clearances for various aspects of construction. It turns out to be expensive when the time-span increases. It happens because when a buyer buys an affordable house turns out to be un-affordable due to time issues.

Interest Rates: The banks have reduces the interest rates by 0.5% but it is not applicable to the existing customers. There have been constant efforts by the buyers of loans and the customers to decrease the interest rates and amend the existing policies that are convenient to both. The total of
interest paid to the banks increase if the construction of site is not done by the stipulated time.

Not so easy availability of finance: Before deciding to buy a property it is necessary to accumulate the right amount of funds or to at-least finalise the sources to acquire the funds from. Banks and housing finance corporation are the apt sources to get finance from. It is necessary to choose the right entity with policies that suits you. Proper homework is necessary before taking
any major financial decisions.

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