What is Affordable Housing?

Indians live in both urban and rural areas, with a fairly even distribution of population. A large number of housing units are needed to accommodate a growing population.

In recent years, a number of initiatives have been launched to provide affordable housing to those in need of it. In this blog, we will talk briefly about affordable housing.

What is Affordable Housing?

Housing units that are affordable for those with incomes below the average household income are referred to as affordable housing.

In India, low-cost affordable housing is available for low-income individuals, middle-income individuals, and economically weaker sections (urban areas).

New Carpet Area Limit

Affordable housing is defined as a house or flat with a carpet area of up to 90 square meters in non-metropolitan cities and towns and a carpet area of up to 60 square meters in metropolitan cities, with a value of up to Rs 45 lakh in both cases.

Measures were taken by the government to help with the development of affordable housing

There are several government initiatives aimed at assisting poor people in building homes. Many of the supporting measures have already been implemented in previous budgets. The government proposes the following in the Union Budget for 2017-18.

Affordable housing will be granted infrastructure status, which will allow developers to access funds from a variety of sources, including external commercial borrowings (ECB), foreign venture capital investors (FVCI), and foreign portfolio investors (FPIs).
Increased the time for affordable housing promoters to complete projects from three to five years;
Developers were given a year to pay tax on notional rental income on completed but unsold units;
Reduced the three-year holding period for long-term capital gains for affordable housing to two years;
The qualifying criteria for affordable housing have been changed from saleable area to carpet area;
National Housing Bank (NHB) has improved its refinancing facility for individual loans in the affordable housing segment.

The following are some of the government’s initiatives for affordable housing,

Housing for all Mission, 2015
Pradhan Mantri Awa Yojana, 2015
Special Window for Affordable and Mid-Income Housing Investment, 2019

Government initiatives are focused on making affordable housing available, but real estate developers also have a part to play in ensuring over 80% of new housing development launches in 2020 will be affordable.

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