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Advantages And Disadvantages Of Affordable Housing Policy

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AFFORDABLE HOUSING POLICY 2009

ABOUT THE POLICY

I. Objectives
The policy shall have the following objectives:
(a) To reduce the housing shortage in the State, especially in EWS/LIG categories.
(b) To take up large scale construction of Affordable Housing (with focus on EWS & LIG housing.)
(c) To bring down the cost of EWS & LIG categories of houses to affordable limits.
(d) To promote investments in housing in Urban Sector on PPP Model.
(e) To involve Private developers in the construction of EWS/LIG categories of houses by offering various attractive incentives.
(f) To create Rental Housing as transit accommodation for migrants to urban areas, and
(g) To check creation of slums.
II. Highlights of Policy

Various Models of Affordable Housing …show more content…

However, the largest share of this investment is made in the informal sector that offers affordable housing to lower and some middle-income groups. Co-operative housing societies also play a critical role in housing market. (Sadhu, 2011)

Adopting a PPP model for the development of affordable housing is the most suitable option as it offers greater value for money where project suitability is correctly measured and implemented. PPP models certainly have a lot of advantages. A few of them are as follows:

1. Cost savings –The private developer’s fundamental drive for profits generate an incentive to continually improve its performance, thereby cutting overall project costs.
2. Risk sharing - Public-private partnerships are outlined so that risk is transferred between the public and private sectors.
3. Delivers on time - any delays in meeting the agreed upon timelines can lead to additional costs for the private partner as it alone carries the debt for a longer period of time.
4. Improved level of services- By bringing together the strengths from the public and private sectors, PPPs have the unique ability to share a diverse range of resources, technologies, ideas and skills in a cooperative manner that can work to improve how urban infrastructure assets and services are delivered to the …show more content…

The cost recovery of developing affordable housing takes long and is not definitive. Target group for the private developers include both formal and informal sector. And recovery, let alone profit margins become problematic for the private developers. The incentives and the increased F.A.R does appear lucrative, but it is only a pretty facade which will do very little to address the urban housing shortage. The most important question is whether these policies will get implemented. The policy suggests reserving land for EWS-LIG in new housing projects. This neither means that the price fixed for such lands is affordable nor that will this land be taken up by the EWS-LIG. Increased FAR and TDR also may not translate into lower housing prices. Nor will reduction in stamp duty. (Wadhwa,

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