Are you thinking of buying a new home? Then, you must have searched for ‘affordable housing’ a number of times till now. According to the survey done in last five years, affordable housing has always managed to remain the biggest saleable area in the real estate sector. And, as a prospective home buyer, knowing about the term in detail is something you should do on a prime note. In simple stretch, affordable segments are those units which can easily be afforded by the citizens whose income is less than the country’s average family income. At the same time, residential projects that economically weak sections can manage to pay for are known as affordable houses.
Affordable Housing is that segment of real estate which is affordable for medium income group of the society. Every country has this segment for lower or medium income groups but have different definitions for the same. The major factor for this situation to arise is the disposable income (income remaining after deduction of taxes and social security charges, available to be spent) which is a primary factor in determining the affordability.
However, the Ministry of Housing defines affordable housing based on revenue, size and several cost-effective measures. For economically weaker sections, affordable housing would mean a unit gauging between 300 and 500 sqft with pricing below Rs 5 Lakh for which one can pay Rs. 4,000- Rs. 5,000 as EMI. For mid-income groups, an entity between 500 and 600 sqft with pricing upto Rs 7 Lakh – Rs 12 Lakh for which an EMI of Rs. 5,000- Rs. 10,000 is required to be paid as EMI would be regarded as low cost housing. Lastly, for the group having average or middle income, affordable segment would mean a division gauging between Rs 12 Lakh and Rs 50 Lakh for which an EMI of Rs 10,000- 30,000 would be required to be shelled out.
At the same time, with the Reserve Bank of India stating the fact that the price of affordable housing should always be less than Rs.65 Lakh in metro cities and Rs 50 Lakh in the non-metro ones, the home buyers in search of low cost housing have got to see a new drift in the pricing, as before 2014, the limit for this was up to Rs 15 Lakh for non metros and up to Rs 25 Lakh for metro cities. However, the explanation from Central Bank for affordable housing in India is based on the credits and mortgages given by several financial institutions for buying flats or apartments. At the same time, the treasury head of a public sector bank has declared that the rates of interest can drop on low cost or economical loans given out of the profits of long-term bonds.
It’s mainly an initiative by the Prime Minister in which affordable housing projects will be provided to the poor as well as mid-income people. A total of 305 cities have been identified by the Government and the scheme for affordable homes was planned to be executed accordingly.
India’s national mission for financial inclusion to strengthen the financial services yet more, Prime Minister has come up with People Money Scheme. In order to secure the fiscal and economic services namely credit, allowance, pension, banking savings, pension etc. To get the financial services done in an affordable and reasonable manner, this scheme has been an awesome inclusion in Indian economy. The scheme is being implemented during 2015-2022. Also in this mission, 2 million non-slum urban poor households are proposed to be covered.
However, the critics have come up with a number of evaluations and appraisals about the scheme. Is the scheme really viable? Is it realistic enough to come to the aid of the middle class people? They say that rich people who are too well-off to even think of being homeless and the poor folks who are too indigent to even dream of the same, quite naturally, fall out of the ambit. The middle class people are the ones who actually get affected by any decision made by the Government. Now, as far as Pradhan Mantri Awas Yojona is considered, is everyone in the middle class clan getting the same facility as expected? Or, to be very specific, can you actually call it a good initiative?
As for instance, what if a taxi driver who has to drive 40-50 kms more everyday to reach the place where affordable housing is provided for him and his family? Does it really make sense? According to the critics and as it really should be, affordable housing scheme doesn’t only mean housing for all. Rather, it has to be perfectly aligned with convenience as well. The house allotted to one should always serve adequate ease and succour to the residents. To comply with the same, the Government along with many developers is stressing on public-private partnerships (PPP) for the development of low cost housing units.
In United States, the Housing Act of 1937 is called section 8 pertaining to payment of rental to private landlords of low income households. USA has a program funded by the U.S. Department of Housing and Urban Development known as section 8 for home choice voucher program. In this program, the lower income group can apply for rent assistance voucher and the approved tenant can choose any rental property that meets the expected standards and has reasonable rent compared with similar units in markets. In this, the tenant can directly negotiate a lease directly with the property owner. The tenant haS to pay minimum of 28.5% of HIS/HER income and the rest is paid by the Government to the landlord.
This is one way government is helping its resident to overcome the housing issues, as it is just not a cakewalk to buy a house in today's time.