Mah Housing Policy: Spotlight on homes for the poor

In a move that is expected to go a long way in providing homes to lakhs of low and middle-income families spread across the state, the government is likely to unveil a new housing policy which will focus on making affordable homes a reality for the economically weaker sections of society.

The highlight of this policy will be the creation of a new ‘housing fund’, aimed at low income groups and middle class sections of society. Any person belonging to these sections of society, regardless of whether he is a government employee or works for the private sector can become a member of this fund by chipping in just INR 1,000 per month to this fund for a period of ten years. The amount will then be invested in securities specified by the Reserve Bank of India.

Members of this fund will have the advantage of not having to go through the otherwise mandatory MHADA lottery procedure when they apply for a home later on.

On applying for a MHADA home, the cost of the flat would be adjusted against his/her contribution to this housing fund. To further incentivize the scheme, the state government plans to approach the central government to grant a tax exemption to all contributions made to this fund.

Also on the anvil is a proposed ‘bank’ for Transferrable Development Rights (TDR). As part of this plan, the government intends to take over private land for the purpose of building infrastructure. Land owners who part with their land for this purpose will be compensated with TDR upto 225 percent of their land.

The government is also said to be exploring the possibility of making TDR freely tradable on the stock exchange, and is said to be talking to SEBI to make this a reality.

Some of the other highlights of this proposed new housing policy are: 

• Builders building projects for economically weaker section of society and those in the LIG and MIG category, thereby qualifying for tax incentives under Section 35 (AD) Rule 11OA of the Income Tax Act, will be made 'eligible' for a 300 percent additional FSI.        
• However to qualify for the additional FSI, the developer will have to pay the state a premium at 60 percent of the Ready Reckoner rate.
• Furthermore, the developer will also have to surrender over 10 percent of the total flats constructed to MHADA.
• The state government is going to come out with such a policy in the next 90 days.
• Apart from this the state is also planning to enlist leading nationalised banks and HFIs to provide home loans at reasonable rates.
• In return, they will be provided with tax concessions and a part payment of the loan as interest subsidy.
• Private builders developing premium projects would be required to reserve approx 20 percent of the built-up area for EWS and LIG housing.
• To promote the concept of working close to home, the government is mulling over a proposal to give concession to employers on their VAT, Stamp Duty and Profession Tax, if they agree to build homes for their employees near the workplace.