The Maharashtra State Government has finally given a mega boost to affordable housing by introducing a landmark new regulation. This rule makes it compulsory for all real estate developers and companies to develop 20% of affordable homes in case they are developing plots that are sized at 1 acre or even more. The notification of the State Government has already been officially issued and will be applicable for all cities with population exceeding 10 lakh citizens with the exception of Mumbai.
This clearly indicates that this new regulation will be applicable in Pune, Navi Mumbai, Thane, Nagpur and Nashik. The notification clearly states that real estate developers will have to develop homes that measure between approximately 300-500 sq. ft. on an average. These flats will compulsorily be sold to people who fall under the EWS (Economically Weaker Section) category and also under the LIG (Low Income Group) category that has earned identification from MHADA. The prices will be the accurate construction cost and 20% extra on the same. However, companies which are building housing schemes for employees to reside in, will not come under this particular regulation.
The MHADA is now the primary nodal agency for implementation of this project. Real estate developers will have to inform the agency about the number of apartments that will be sold under the 20% quota post receiving the commencement certificate from local urban development and planning authorities. Within a period of 6 months, MHADA will be holding its lottery and will be informing the names of beneficiaries to the real estate developer in question.
Maharashtra’s real estate sector is still cautious about this new development. They have sought more incentives from the Government for executing this affordable housing scheme along with greater clarity. Industry experts feel that there is greater clarity required for this new policy. There will be difficulties linked to execution otherwise. The cost must be recovered by the real estate developer once there is commencement of the 20% quota through installments. The State Government and MHADA should also assure timely payment from all beneficiaries.
Other industry players also feel that extra FSI (floor space index) and other incentives should be offered to real estate developers in order to successfully execute 20% public housing reservations. In case the State Government can address these issues, it will be a major boost for the affordable housing sector in general. Some industry players are also wary of catering to 20% as a fixed quota since there are chances of facing high losses. However, they also feel that real estate developers can move forward in case the Government assures compensation for their losses.
