Maharashtra Government is planning to launch rental housing scheme

State Government of Maharashtra is planning to re-launch its one of the most ambitious rental housing scheme for MMR region with a hope to succeed with more liberal norms as they were failed to draw better impact previous from private real estate developers.
It is expected that FSI (Floor Space Index) for the projects which is under public-private partnership will be between 3 or 4 as earlier it was 3, as per the statement of official of Mumbai Metropolitan Regional Development Authority. Above this for additional FSI, real estate developers will have to pay apprx.60 per cent or reckoner rate as premium. However; FSI refer to the size of the piece of land on which it is built and the ratio of a building’s total floor area. Mumbai Metropolitan Region (MMR) includes Thane, Mumbai and Navi Mumbai.

According to the Maharashtra State Housing Policy of 2007, the rentals housing scheme was first time introduced by the state government in 2009, which was allowing the participation of developers from private sector with an aim to reduce the slum clusters, however; on that time some developers received the sanctions for such projects and later this scheme extended to suburbs such as Karjat, Virar and Thane. Because of few changes in norms the scheme failed to take off., but this time it including an increase in the size of the housing units from 280 sq ft to 160 sq ft. However;in 2013, the state government lowered the highest permissible FSI (Floor Space Index) under the scheme to 3 from as earlier it was 4.
Later in November 2013, the original rental housing scheme was modified into an affordable housing scheme. And under the modified scheme the private developers will offer the additional FSI as incentive in return for self contained tenements. These houses or flats will be allotted by the state agencies to only those households who are from low income groups. In Maharashtra, the three main state agencies are; Slum Rehabilitation Authority, MMRDA and Maharashtra Housing and Development Authority and they will get the responsibility to implement the scheme properly. The modified scheme is emphasizing on connectivity, civic and social amenities and opportunities to earn livelihood.

In the previous years due to highly quoted prices, Mumbai real estate industry had to go through slow down in sales and responses. Several projects were left incomplete due to lack of environment clearance, disputed lands, incomplete approval from authorities, and very often builders were lacking financial support. With the win of Modi led BJP as the new central government, real estate industry expects revival with efficiency in approval process and easier and smoother bank funding.

Currently, the main factors affecting the growth of real estate market of Mumbai are:

• Improved policies of government for boosting the real estate sector.

• State government’s take on its policies related to New Development-Controlled Regulations, Redevelopment, Slum Rehabilitation Act (SRA) and Floor Space Index (FSI).

• Impact of infrastructure changes across the Mumbai Metropolitan Region for boosting the real estate industry.

• Role played by MMRDA and MHADA in the real estate housing sector.

• Reasonable and affordable housing policies.

• Other various factors important for market dynamics like holding capacity of developers, their strategy for sales, acquisition costs, peer pressure for competition, premium on a brand, amenities involved in the project etc.

What about the factors affecting the property prices? These are land cost, price of raw material, technology, labour and others. The existing stock of homes in the city has been constructed with high prices of land and raw materials. Thus, it would not be fair to expect immediate price corrections.

So what are the actual demands or expectation of Mumbai real estate industry? Let us elaborate it:

• A confident government with firm policies for making reality market strong.

• Quick and single window clearance system.

• Easy availability of raw materials at subsidize cost.

• Tax incentives and simpler taxation system.

If all these problems are resolved successfully, it will be a great help in controlling the skyrocket prices in real estate industry and the dream of Modi’s government of ‘a home for all’ in a city like Mumbai will not be a dream anymore.

So, are we seeing any positive changes since the new government? Well, just even before the elections the Housing Sentiment Index (HSI) reflected the signs of improvement in consumer sentiments in Mumbai. HIS is a sentiment index of the Indian real estate market that captures buyer ‘mood’ and acts as a sign of changes in real estate market performance.The HSI improved by 24 per cent as compared to a rise of 5 per cent in the last quarter. The HSI for Mumbai has moved even above 100 for the very first time in four quarters and today it has reached up to 106.
Though with this year we have seen progress in the overall economy, still lot of work needs to be done to revive the lost confidence in the real estate sector. Start of 2014 was quite positive for Mumbai real estate as it saw almost 20 to 30 percent of increase in the sales but later closer to elections transactions started coming to a standstill.