The Affordable Rental Housing Complexes (ARHC) scheme approved by the Union Cabinet will not only provide proper living facilities to urban migrants and poor but also aid the real estate sector by regularising the rental housing segment and create job opportunities, experts said.
As part of the scheme, existing vacant government-funded housing complexes will be converted into Affordable Rental Housing Complexes through "concession agreements" for 25 years.
Anuj Puri, Chairman, ANAROCK Property Consultants, believes that the move will not just regularise the rental housing market across the country, but also add another asset class to be considered by developers at large.
The scheme will bridge the shortfall of dwelling units across the country. All states will also be asked to develop such products and encourage private partnerships.
Welcoming the move, Niranjan Hiranandani, CMD - Hiranandani Group and National President- NAREDCO, said that the scheme will help provide proper habitat and living facilities to the labour which is much needed to power the urban economy, in the form of production and service providers. Investment under ARHCs has the potential to create new job opportunities.
Under the scheme, special incentives such as use permission, 50 percent additional floor area ratio or floor space index, concessional loan at priority sector lending rate and tax relief at par with affordable housing will be offered to private and public entities to develop ARHCs on their own available vacant land for 25 years.
“The scheme will make housing available at an affordable rent, at locations close to the place of work. Effectively, it will cut down unnecessary travel, congestion and help control pollution,” Hiranandani added.
Meanwhile, Anuj Puri pointed out that many developers have significant land parcels both within the cities as well as their peripheries – the latter land parcels being prime candidates for affordable housing, including rental housing. Land parcels in the municipal limits may not be viable for this purpose, given the high land rates, he noted.
However, low yields are likely to be a major deterrent for attracting private participation, he added.
“Even while funding for such projects is said to be given at concessional rates, it may still be unviable for developers who have bought land within city limits at steep prices earlier on. Even while the government has tried to address these deterrents and provide benefits and incentives, we will have to wait and watch and see how this move can mobilise the interest from the industry,” Puri said.
Under the scheme, the concessionaire will make the complexes livable by repair or retrofit and maintenance of rooms and filling up infrastructure gaps such as water, sewer, sanitation, road, and related work.
Manju Yagnik, Vice Chairperson, Nahar Group and Vice President, NAREDCO (Maharashtra), said that the housing sector is directly and indirectly linked to over 200 allied sectors.
“The credit-linked subsidy scheme and affordable rental housing scheme will boost the demand for steel, cement and industries linked to the supply of raw material,” she said.
On May 14, Finance Minister Nirmala Sitharaman had announced the scheme under the 'Aatmanirbhar Bharat' package.
Official sources said more than 3.5 lakh people will benefit under ARHCs.