As political slogans go, ‘Housing for All’ is a promise with universal appeal. We all want a house. It is the best insurance against an accident to the breadwinner. The family has a shelter and, in extreme distress, it is an asset. But acquiring a house is, for most, a once in a lifetime possibility and by ‘most’ we mean 10% of the population in India. Those who do dare to fly into the sun and indulge by buying a house feel the heat for the rest of their living days. The debt burden takes that long to be discharged.
The quality of the construction is usually sub-standard and the space acquired is almost always less than what is needed. This is a compromise all home-buyers have to make, ranging from LIG (lower income group) to HIG (higher income group). The swindle is compounded when the builder sells on super area rate and you get to use only the carpet area: a reduction of valuable space of at least 20% of your precious home. If the acquisition is from a State agency like a Housing Board or a Development Authority, then all the above-mentioned negatives can be multiplied by a factor of at least two. Construction and material standards are abysmal and the internal roads and drains become functional well after residents have moved in. But, yes, it is a shelter. Should you be so foolhardy as to seek compensation for deficient quality or delayed delivery, be prepared to fight well into your next life.
What about the aspirations of the other 90% who also want a house? We have a promise of ‘Housing for All’ by 2022. This isn’t very far and, hope being a beggar, it is better to take its blessings rather than put your faith in this declaration of an achievable mirage.
Let’s look at the size and magnitude of the ambition to get to ‘Housing for All’ by 2022. As per the documents in the public domain, the famed KPMG has put a study out giving a perspective on the issues and concerns in the real estate sector. The housing shortage in urban areas is estimated at 19 million dwelling units. Out of this deficit, 9 million houses are stated to be vacant, but not accessible. These could well be a part of the usable stock, but archaic laws and the onerous judicial process in getting properties vacated by the owners restrict rental options. In our country, the process is the punishment even if the law of the land is on your side. Many owners, by choice, prefer to keep their properties vacant for these very reasons. Some of these owners are also hopeful investors waiting for an opportune time to sell for good profits. Still, the fact remains that the problem is big and answers are needed to build at least 19 million houses across India and perhaps a large proportion of them are needed in some 100 cities or so, where the economic thrust of the country is concentrated.
The history of performance of the homebuilders, bad in the public sector and worse in the private sector, is not at all encouraging. As per a report in The Economic Times, no project has ever been delivered on time. Between 2008 and 2011, out of the 1.70 million apartments launched, 55% have been delayed by at least one year, 18% up to two years, 11% up to three years and 20% up to four years. This is the reality of the building industry. Why we call them an industry is anybody’s guess!
Are we going to pin our hopes on this delivery mechanism to achieve ‘Housing for All’ by 2022? Perhaps, by 2222, maybe.
We have to eat the elephant, no doubt, so let us start by chewing the tail. The good news is that the housing market in our country will not fail. There is at least 50% of the registered value of the property that is invested in cash by the buyer. The lending system is at risk, for sure, as they should be, since their lending strategy has a high component of ‘who the borrower knows’, rather than on strict financial prudence. Not all can be tainted with the same brush, but more than you can imagine are guilty. The individual buyer, however, will do everything to protect his investment. Likewise, the housing market will always have buyers and sellers because it is also generating cash from its business and investors are generating cash from their businesses. This money will find its way into the real estate, gold and conspicuous consumption avenues.
It is not a triviality that the corrupt practices also continuously generate cash, which impact real estate prices and sustain them artificially. The myth of ‘affordable housing’, is just that; a buyer’s fancy. Interest subventions and tax benefits on housing loans notwithstanding, affordability is always a prime concern for the buyer. The structure of the costs, which comprises land, building, collateral services and taxes, throw the whole idea of affordability straight out of the window. In any case, we have to seriously answer the question of whose affordability will we address first.
As a nation, we have always gone overseas in search of the roots of our problems. The famous foreign hand keeps us back from our rightful place in the sun. But now we need to go there in search of some solutions. Construction technology has been transformed over the years and 20-floor buildings get finished inside of 15 months. We need to change the legislative environment to facilitate the participation of foreign companies with their technology to build and deliver in short time frames. And, as a law, all builders will have to provide a 20-year guarantee in every project they deliver, to fulfill their responsibility towards quality. The local real estate companies will scream, but since we have a goal to reach by 2022, they have to be given the same playing pitch. The activity of construction is, really speaking, the penultimate stage before a buyer moves in. There is a long list of things to be done before the first brick is laid on the ground.
The long list begins with the building laws, land laws and titles. These need immediate restructuring to ensure that they are simple to understand and easy to comply with. The state governments need to create the climate for making real estate growth transparent and rules enforceable.
Every potential urban geography needs to be mapped with relevant parameters, zoning and Floor Area Ratio (FAR) laws, with full details of the urban envelopes and design controls.
The FARs need to be in double digits so that densities are taken into account for liveability and good environment. Before a brick is laid, connectivity through urban and rural corridors around the proximity of the urban centres needs to be seamlessly networked. Drainages, sewerages and waste disposals, indeed a whole ecosystem has to be given priority. The cultural ethos of the designated urban centres has to be channeled purposefully. Ensuring compliance has to be the only hallmark of competence of the governance protocols. Only a fully empowered group in each state can deliver the stated goal.
It is a complex conundrum that, in this country, we know what is to be done, and yet invariably we fail to do it or do it only in parts. The progress by installment will render the whole story fragmented. The choice now is: 2022 or 2222? If we go for 2022, then the time to start unscrambling our strategy is today. If it is 2222, then 99% of our countrymen will not have a house of their dreams, not in this life, for sure. The road to housing begins from good and fast connectivity in and around the city as well as its suburban nodes to give a wide choice in buying a dwelling. It needs a collateral network of social facilities like schools, hospitals and leisure venues to make living a joy and that is the way to go. Affordability will come through competitive choices and not through monopolies and this can happen only when the State creates a regulatory environment without biases, but with credible neutrality. The Act has come into being and now has to prove itself to aid housing delivery. All hopes are desperately pinned on 2022.
Raj Liberhan is former Director of India Habitat Centre, a premier multi-cultural institution in Delhi, India. He now writes on public policy concerns and on urban issues from a citizen’s perspective.
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