Authored by: Vikas Wadhawan
There can be no two opinions about how the coronavirus pandemic foisted on us one of the greatest human sufferings in living memory. Poignant images of migrant labourers and their families—stranded in cities amid the lockdown—walking hundreds of miles back home still haunt us. Many made it, some didn’t. While the suffering wasn’t by design, it served as great learning for all of us, and the government has acted on that lesson swiftly to ensure no one goes through such suffering again.
One of the outcomes is the Affordable Rental Housing Complexes (ARHCs) for migrant workers and the urban poor. The lack of affordable housing was the primary reason why thousands of migrants decided to return home during the lockdown, and the ARHC may be just the antidote to that problem in the future. Let's take a look at the program more closely.
What is ARHC? The ARHC has been envisaged as a sub-scheme under Pradhan Mantri AWAS Yojana–Urban (PMAY-U) with a view to provide ease of living to urban migrants and poor people engaged in non-formal sectors of the economy. The scheme will help them get access to dignified and affordable rental housing near their workplace. The scheme among other things will help unlock existing vacant housing stock and make them available for affordable rental. It will encourage investment and promote entrepreneurship in the rental housing sector by providing the right incentives for private companies and public entities to utilise their vacant land for developing ARHCs.
As per the definition provided in the scheme, the ARHCs will mean a listed project with a mix of at-least 40 Dwelling Units (DUs) and Dormitories along with basic civic infrastructure facilities such as water, sanitation, sewerage, road, electricity along with necessary social and commercial infrastructure for urban migrant, poor of EWS/LIG categories. The dwelling units will comprise a single bedroom up to 30 sqm/double bedroom up to 60 sqm with living area, kitchen, toilet and bathroom and Dormitory Bed of up to 10 sqm carpet areas each. Initial rent of ARHCs will be fixed by Local Authority/Entities based on a local survey of the surrounding area, wherein the project is situated and shall be operated for a minimum period of 25 years.
Projects under ARHCs will be applicable for consideration and funding until PMAY (U) Mission period (till March 2022). Projects approved during the Mission period will continue for another 18 months to enable fund release and completion of projects. Beneficiaries of ARHCs will also include street vendors, rickshaw pullers, and other service providers, industrial workers along with migrants working with market/trade associations, educational/health institutions, hospitality sector long-term tourists/visitors and students.
The government has envisaged two models for implementation of the scheme— (a) converting existing government-funded vacant houses into ARHCs through Concession Agreement and (b) construction, operation and maintenance of ARHCs by Public/ Private Entities on their own available vacant land.
Model-1 envisages converting existing Government funded vacant houses in cities into ARHCs through Concession Agreement for 25 years. Under this model, government-funded houses constructed under JnNURM and RAY for slum dwellers will be on an ownership basis. Some of the properties lying vacant and unutilized will be made livable for rental purposes for migrants/poor by repairing/retrofitting along with providing necessary civic infrastructure facilities. Concessionaires will be required to Repair/Retrofit, Develop, Operate and Transfer (RDOT) ARHCs to ULBs after completion of the contract period. Concessionaires will ensure that all civic infrastructure gaps like water, sewer/ septage, sanitation, internal road etc. are addressed.
Thereafter, these will be Developed as ARHCs and Operated for a concession period of 25 years and then Transferred in livable condition to Urban Local Bodies (ULBs) after completion of the contract period. Initial rent of ARHCs will be fixed by the local authority based on a local survey prior to the issuance of Request for Proposal (RFP) by ULBs. Subsequently, rent will be enhanced biennially by 8 percent, subject to a maximum increase of 20 percent in aggregate, over a period of 5 years, effective from the date of signing of the contract. The same mechanism shall be followed over the entire concession period of 25 years.
Under Model-2, Private Entities (Industries, Industrial Estates, Institutions, and Associations) and Public Agencies on their own available vacant land will construct, operate and maintain ARHCs for 25 years. The entity can partner or associate with other entities for land arrangement, project financing, implementation and operation and maintenance. ARHCs constructed through this model will consist of a mix of Dwelling Unit (DU) (up to 30 /60 sqm carpet area each) and Dormitory of 4/6 beds (up to 10 sqm carpet area per bed) including all common facilities. The minimum size of dwelling units (single/double bedroom) and dormitories shall conform to the requirement of the National Building Code (NBC) and State/ Local Authority norms. A single project of ARHCs shall have at least 40 DU (double bedroom/ single bedroom) or equivalent dormitory beds (1 single bedroom unit of up to 30 sqm carpet area is considered equivalent to 3 Dormitory beds). There will be complete flexibility to Private/Public Entities to have any mix of single/double bedroom and dormitories (4/6 units).
However, to ensure that such complexes are used for urban migrant/poor of EWS/LIG category and not misused for any other purposes, a ceiling of a maximum 1/3 dwelling units (33 percent) in a double bedroom format in any project has been provisioned. Initially, affordable rent of ARHCs will be fixed by the entity as per the local survey. Subsequently, the entity can increase rent biennially at 8 percent, subject to a maximum increase of 20 percent in aggregate, over a period of 5 years, effective from the date of signing of the contract. The same mechanism shall be followed over the entire concession period for 25 years.
In order to fund this scheme, an Affordable Housing Fund (AHF) has been set up within the National Housing Bank with a corpus of Rs 10,000 crore to provide refinance assistance to Housing Finance Companies in respect of their individual housing loans to target segments in rural and urban areas. AHF is allocated by the Reserve Bank of India (RBI) out of the priority sector lending shortfall.
The ARHC scheme, if implemented in letter and spirit, will have multiple benefits for society as well as the economy. At first, it will provide a decent and hygienic living space to the workers who are the backbone of an industrialising economy. In addition to improving the urban landscape, the scheme in the immediate run will also boost the real estate sector which has been suffering for long. And most importantly, the scheme will spur economic activity on a large scale by generating employment opportunities, fuelling demand for cement, steel, electrical equipment etc. and promote a feel-good factor and lift the mood of the nation reeling under the impact of the pandemic.
—Vikas Wadhawan, Group CFO, Housing.com, Makaan.com and Proptiger.com. The views expressed are personal
(Edited by : Ajay Vaishnav)