Government proposes PPP model to boost affordable housing

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Government proposes PPP model to boost affordable housing
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Government proposes PPP model to boost affordable housing

18 Jul 2017
The union government has proposed a public private partnership (PPP) Policy, under which affordable housing will be provided land in order to boost housing development. The Ministry of Housing and Urban Poverty Alleviation (HUPA) has formed the model of PPP policy for affordable housing to induce the developer to explore extra developable area. The policy has been launched to boost PMAY, a leadership initiative of the Union Government. So far, only eight PPP projects have been launched on the government land. ‘Housing for all by 2022’ has been one of the chief agendas of the union government, taking under various state governments and financial institutes to focus in this area. The government has also proposed infrastructure status to affordable housing in Budget 2017, providing financial availability at combative terms.

It is a policy to uplift a win-win situation for both the government as well as the developers, where taking into consideration the interest of the developers, the government will achieve their agenda. Now, the government will give benefits to private players also including the planned-projects on private land, through endowment of interest and direct per beneficiary amount. Ssumit Berry, Managing Director, BDI Group, says: “This is much needed decision by HUPA. A PPP model will aid Pradhan Mantri Awas Yojana and provide a much needed push to affordable housing. PPP will increase the private sector’s role in the vision of the Union Government in providing everyone with a house. It will also help in overcoming the challenges faced by the real estate sector in constructing affordable housing.”

Developers are of the view that through this policy government has launched a way for the private builders to deliver homes at low cost. “Already, affordable housing was incorporated under infrastructure (in budget 2017), which improved this segment’s liquidity from an assortment of funds. For example, pension funds and insurance firms, can now contribute to affordable housing projects. For projects on private land, too, there will be benefits from the government, through interest subsidy and direct ‘per-beneficiary’ amount, giving a vital push to affordable housing”, says Vineet Relia, Managing Director, SARE Homes.

The much needed PPP has come two years after the launch of PMAY on June 25, 2015. The policy models have been implemented on the aspects of private developers’ risk exposure, maintenance of houses, land ownership and beneficiary-developer monetary relationship. The state housing board can also use the government fund to develop on government land without the private players’ involvement. Deepak Kapoor, President of Credai Western UP, says that Housing for All is a huge task and the recent policy decision shows that the government is sincere in working out things that will help end users, who are struggling to bear the burden of burgeoning EMIs.

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