Mumbai's affordable housing policy tweaked to boost builders

MUMBAI: Faced with stiff opposition from developers, the state government has amended the city's affordable housing policy that stipulated that a portion of the plots be kept to build low-cost homes free of cost.

The amendments proposed by the urban development department said builders no longer have to carve out 20% of their plots for public housing. Instead, they can construct cheaper tenements anywhere within the same administrative ward. Housing experts questioned the move pointing out not many builders have plots in the same ward. "Will developers be forced to buy another plot to construct these tenements?" asked industry insiders.

In a notice issued on Monday, the government offered 50% free floor space index (FSI) to developers to build tenements on alternative plots in the same ward.

Builders said they will oppose it because the Slum Rehabilitation Authority (SRA) provision already allows them to provide tenements in faraway wards.

The mandatory 20% affordable housing scheme will also not apply to housing society redevelopment projects where the existing flats are less than 600 sq ft. If the existing flats are over 600sq ft, the builder will construct additional tenements but need not hand them over to the state housing authority, Mhada. "They will be constructed either in a separate block or in a separate wing in the same building and allotted to the housing society for use as 'service quarters'," said the notice.

This may complicate things. "It will lead to tussles among housing society members on who should be allotted these tenements," said the member of a housing society. The department has proposed a 300% premium on the "applicable rate" to be paid by the society if these service quarters are sold to outsiders.

The government has clarified that 20% reservation for affordable housing will not be applicable to redevelopment projects for old and dilapidated buildings, slums, Mhada colonies, clusters and on defunct industry land. In these schemes, more than 20% of the basic zonal FSI is already utilized for low cost housing, it said.

Lack of affordable housing has reached a crisis point in Mumbai with public agencies like Mhada able to build around 2.8 lakh tenements in the past 15 years. The SRA provided 1.6 lakh tenements in the past two decades. A report released by NGO Praja early this month showed different public agencies like Mhada, SRA and MMRDA have been able to provide around 3.1 lakh homes between 1995 and 2014, of which 1.1 lakh tenements are still under construction.

Architect and urban researcher Neera Adarkar said an average salaried person can no longer afford to buy a home in Mumbai. "A few years ago during recession, when developers could not sell their luxury flats, they divided them into four parts and started selling homes of 500sq ft each. This is not what affordable housing is about," she said.




Last year, a report by Knight Frank, a global realty consultancy, listed Mumbai as the most unaffordable housing market in the country with 29% of its under-construction dwelling units exceeding the Rs 1crore mark. Relentless price rise and higher concentration of premium projects had limited the purchasing ability of homebuyers, it added.

Pankaj Kapoor of Liases Foras, a property research firm, said affordable homes are only available 50km away from Mumbai. "But even in these far-flung places, 60% to 70% of the homes have been sold to investors and not end-users," he said.