The soon-to-be released housing policy has much in store for those in the lower- and middle-income groups looking to purchase a house.
The policy offers a number of schemes that focus on affordable housing — this includes linking public/private sector employees’ contribution for housing to provident fund accounts, funding the developers for deferred payment of flat price and slashing the stamp duty to 1%.
It even encourages private companies in the Mumbai Metropolitan Region (MMR) to construct houses for their employees.
The draft policy, a copy of which is with HT, will be first distributed to the MLAs and MPs for their suggestions and objections in the next two days. “The suggestions by the elected representatives will be incorporated in the policy, which is expected to be made public by the end of the month. We have formulated a comprehensive policy after a thorough study of various aspects,” said Ravindra Waikar, minister of state for housing.
The policy, which aims largely at providing 11 lakh homes in the MMR by 2022, has proposed funding private developers from the corpus of Rs 1,000 crore to be created by the government.
From the corpus, the developers willing to construct tenements for the economically weaker sections (EWS) and the lower income group (LIG) will be funded by the government.
The cooperative housing societies that are being redeveloped, too, will be entitled to the funding. The homebuyers, in such cases, will get possession by paying just 10% of the flat cost, while the remaining 90% will have to be paid by the end of 15 years.
During this period, the developer will get the funds from the corpus. The interest, however, will have to be paid by the borrower for 15 years.
The policy has also proposed various ways to make housing projects financially viable. This includes linking the housing fund with the provident fund of government and private sector employees with the intention of providing homes from their savings. Their 50% contribution to the PF will be diverted to the housing fund and after 10 years the employee will be allowed to apply for government housing schemes.
“For instance, if the PF contribution is Rs2,000, it will be split into two with Rs1,000 deposited in the housing fund. The contribution will be invested in RBI-specified government securities, thus paving the way for housing finance and giving the employees an opportunity to save for a home. Contribution to the fund may attract income-tax exemption,” the draft policy states. T
he state will approach the central government for certain modifications in the rules related to the PF.
To keep the prices of tenements under control, the policy has proposed slashing the stamp duty —to anywhere between 1% and 3% from existing rate of about 5% — for flats for lower and middle income groups. It has further proposed bringing down the registration charges to Rs 10,000 from the existing Rs 30,000.
The policy also has the provision of encouraging private companies in the MMR to construct houses for their employees by giving them concessions in stamp duty, VAT and professional tax.
To promote the construction of smaller houses — between 300 and 850 sqft — the policy has the provision of additional FSI of up to 300%, by paying the premium at 60% of the ready reckoner rate to the government.