Affordable housing in Mumbai, a fact or a myth?
By Pallavii Pitale
The skyline of Mumbai is now being dominated with skyscrapers. Almost 1.25 lakh apartments on an average are being developed within the radius of five kilometer in Mumbai. In areas of south Mumbai, they are ranging from minimum 5 crores onwards. In suburbs they cost anywhere above 20lakhs. So who are the people staying in these houses? Can we say, we are providing affordable housing for the common man?
It is being told that the increasing FSI shall bring in more supply and thereby would reduce the cost of the housings but on the contrary, it has been observed that with the increasing FSI, the rates also go up and never fall down much thereby creating hopeless situations for a common man to afford buying a house in the island city. If we look at the facts, the reasons are many.
In spite of announcing the housing policy in 2007, the state government of Maharashtra has not come up with any solid steps to achieve their goal. Up till now, even after three years, they have implemented only 5% of what was expected out of the policy. Also there are no proper means and norms to stop people coming in Mumbai from other parts of the country, world, or even people from the other parts of the state itself. Due to which there are slum problems, extreme stress on the provision of the basic necessities and infrastructure for the survival.
To provide enough housing for all these people, there are no enough lands within the city limits. Due to that the available lands are priced exorbitantly. The delay in aggregating actual land and virtual land like the FSI and TDR makes the properties beyond the reach of people. The transaction costs for developing the properties are about 20-25% for the builders. With many other expenditures, builders justify themselves for not being able to develop affordable housing in the city. Some of the developers are of the opinion that the FSI can be increased at least up to 6 to maximum 10%. The transaction cost if brought down can help developers coming up with housing options that are a bit economical.
Due to above facts, many of the natives of the place or the people, once part of the city are forced to settle themselves either on the outskirts of the city or to some other or native place. Sometimes now they are found showing their grand children, the areas where they stayed in this Metropolis, once upon a time.
Everyone would agree that the government needs to take up some decisions to regulate the procedures for land developments and there must be a body which can control and monitor these processes without any corruption. Also there could be a possibility to develop zones like SEZs for affordable housing. The other option could be of ‘Reverse Tendering’ where the land allotted for auction is given to a bidder paying base price and promising maximum no. of affordable housing within the project and on completion, hands over the project to the government. To check and verify the possibilities with this concept, the first ever such project is coming up in Rajasthan.
This is a myth only.first of all let me tell you for example more than 30 years old dilapidated building are there.90 % of them do not have conveyance,they want to go for redevelopment but builders or land owner do not give conveyance.now take example how state government makiing people fool.they are talking about deemed conveyance,president has given assent,but govt not all making it a law.also if they will make it court will take 7 to 9 years to get the conveyance.take example of gaytri sadan in borivali(west).people or housing society want to go for redevelopment but for conveance builders or land owners demanding exorbitant prices.another example talikng of four lane is going on from churchgate to virar from 1990,where is the train available.because it is accroding to deepak parekh,builders & politicians does not want the price in city to go down at any cost and you are talking about affordable housing.Look at the sea link construction 9 years.cos gone up from 400 cr to 1600 cr.what a blunder.link road for last 30 years hearing that beyond borivali provided,this is just a talk.mumbai doesn;t have proper drinking water.no proper roads.highways are a mess.take example from borivali to goregaon by road on highway it takes 1 hour during office time.local trains tell politicians to travel at least for one month from churchgate to virar.we will give them whatever they want.highly absurd. 1. According to Deepak Parekh, it is the right time to set up a real estate regulator.
He added further that realty prices have started to jump up to the 2007 levels.In a company meeting he said.when we have sebi to check the irregularity in capital market.to look after financial transactions we have RBI.But reality sector has no regulater at all.country having a population of 120 crores.50 % people below poverty line.there are malls in the cities to sleep,no demand at all.take example of mumbai city where prices in suberbs have sky rocketed,there clearly builder lobby & politicians behind that.look at the prices 2006 in western suberbs 2500 rs per sq.ft/ to 2010 10000 rs per sq.ft. 400% jump in 4 years.has any one’s salary or income increased 400 % in 4 years.how this price is going to justified.everyone knows black money is being white by all khaki topis with the hands with builders.how 80 to 90 % middle class will survive in such a scenerio.people have so much mental agony towards the govt.that they should not at any point of time come to power.really absurd.for 3000 mhada housing 12,00,000 applications & politicians are talking about affordable housing.My request to people for house 1 bhk you pay 50,00,000 to 60,00,000 in suberbs of mumbai you get 8% int on your fd 45000 to 50000 rs per month.& you pay rental for the same 10000 to 12000 rs please go on rental this is housing bubble going to burst.around all the world 50 to 60 % prices has crashed.china will affect the economy like anything.so don’t ever buy real estate for now.prices will come down drastically.mark my words.
Why is Housing in Mumbai not affordable to the common man?
“I live in my dream house”, this is a statement very few people inMumbai can honestly say out loud. Buying a decent affordable housealways has been a distant dream for most Mumbaikars. The rocketinghousing prices year after year is just distancing the dream further.However it gets difficult to understand that how is the citysustaining a housing inflation of more than 30% every year when thesalary inflation is 5-10% a year? A very common answer put forward bybuilders here is that the supply is less than the demand.Though this argument is partly true, it does not seem to be the realreason for this rise.Weak government policies and procedures have been instrumental increating this situation. Giving incentives and more FSI seems to beanswer by the government to counter this inflation for affordablehousing.On close introspection of the registration of flats and builderinventories you will realize a very interesting situation, most of theregistrations are Investor flats and not end user registrations. Sothe common man is still demanding for an affordable house.Now how does this nexus work. The government has a Ready Reckoner Ratefor each area on basis of which it collects the registration amounts,this rate is based on Carpet area and is much less than the actualmarket value of the flats. (For Eg. The RR rate in Andheri(W) isaround 5000 Rs on carpet area whereas the Market Value is between11000 – 12000 Rs on super built-up area).The investors and builders now form a nexus to evade taxes andoffcourse park all their black money into these flats as an investmentwhich ultimately gets converted into white money when they sell of theproperty at a premium rate. The registration amount of the flat isvery less, sometimes half the value actually paid, the remaining halfis paid to the builder in cash ie Black money. This way the investorevades the registration amount by half, he gets to park his blackmoney earned through illegal means and the builder evades income taxby showing that he sold the flat cheaply at a lesser profit.We all know who today are the most corrupt people and thereby who hasthe maximum amount of Black money, they now boast of bringing theblack money from the Swiss accounts but what about all the croresparked here in India. Worry about them first? If you are genuinelyinterested in getting the tax evaders.In my past few months of Home search I have seen rampant corruption,cheating and money laundering taking place. MHADA flat allotted aresold out the first day by taking advantage of the loophole of rentingout those flats for a lock in period of 5 years and then it becomes afreehold. Crores are being looted in name of Super-built up area anddevelopments fees, parking charges, etc.We have news everyday about a few hundred crores of corruption inCommon Wealth Games, Illegal Mining, etc. If you will investigate thisproperty nexus you are going to unearth maybe a much much bigger scam.
So why does this not happen, its simply because the politicians arethemselves investors and they would never want their black money banksto get affected and infact they are creating a bigger money makingscam by increasing FSI and incentives for older properties, sellingMill lands in name of development, Fraudulent CIDCO land deals andmany more. The print media does not raise a voice because builderstoday are some of their biggest revenue generators.
One of the solutions to this problem is simply increase the RR rate tomarket value and convert it to super built up rate, as this rate isnot constant government can hike it up as well as bring it downdepending on the prevailing market conditions.This would in-turn makeproperty investment an unsafe haven for parking black money andthereby increase the supply and bringing down prices.Would only end in the hope that someone would take up the cause andhelp the ever burdened Common man already crawling under the burden ofInflation.