Affordable housing: lessons to be learnt by India

Over one year since Prime Minister Narendra Modi visited Canada in April 2015 where he had talked about affordable housing initiative of his government and two years since the NDA government came to power, is the affordable housing scheme on track?

Ironically, in Canada, providing affordable housing as a federal initiative has been yielding results since 2011. In the latest federal budget, the Canadian government has allocated $2.3 billion to be spent over the next 24 months on providing affordable housing to over 119,000 families who are living on the street or are homeless. The Federal affordable housing program has also got $111.8 million to help 61 cities tackle the ongoing challenge of homelessness.

Over 600,000 affordable housing units are built annually in Canada and the federal and local governments are running campaigns to remove homelessness. India has to construct five times this number every year till 2022 for ‘Affordable Housing‘ scheme to become a success. Currently, there is no data provided by the government on how many affordable housing units are constructed in 2015 or in the first five months of 2016. However, as on April 25, 2016, a total of 2,508 cities of 26 states have been identified as selected for Pradhan Mantri Awas Yojana-Housing for all (Urban) Mission,” Urban Development Minister M Venkaiah Naidu said in the Parliament a few days ago.

On the policy side, the Union Budget presented in February did make positive announcements to push affordable housing like allowing 100 per cent deduction for profits to housing projects of homes up to 30 sq meters in the four metro cities and 60 sq meters in other cities approved during June 2016 to March 2019.

While India looks at ‘affordable’ solely in terms of the lower income group segment where a 200-300 square foot dwellings priced at between Rs 7-12 lakh qualifies as affordable.

In Canada, the Canada Mortgage and Housing Corporation considers affordable housing if the shelter costs account for less than 30 per cent of before-tax household income. As per CMHC, the term “affordable housing” is often used interchangeably with “social housing“. “However, social housing is just one category of affordable housing and usually refers to rental housing subsidized by the government. Affordable housing is a much broader term and includes housing provided by the private, public and not-for-profit sectors as well as all forms of housing tenure (ie. rental, ownership and cooperative ownership),” it says on its official website.

Developers and real estate experts have been highlighting a number of challenges that need to be tackled before affordable housing targets can be achieved. Availability of land, low-cost loans, timely construction and delivery are among some of the basic pleas that has been repeated by those who deal in housing and real estate business.

Canada is also using the money to construct affordable rental housing. This option is not at all within the scheme of things of the central or state government.

Credits Business World

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