Should state agencies such as MHADA and DDA be in the housing business?

Should state agencies such as MHADA and DDA be in the housing business?

Some experts also believe that it’s time that agencies like MHADA and DDA should rather focus more on its evolution because they continue to remain an essential component of India’s housing sector

The Maharashtra Housing and Area Development Authority recently announced winners of the housing lottery in its Mumbai division for which as many as 819 dwellings were up for grabs. MHADA received around 63,000 applications for these units which was much less than the 1,35,000 applications received in the housing draw held in previous years.

According to the MHADA officials, the low turnout is due to fewer housing units on offer. “Last year 972 dwellings were offered by us against this year’s 819. Therefore, a fewer number of applications have been received this year”, says Vaishali Sadansingh, Chief Public Relations Officer, MHADA.

On offer this time were – 8 houses in the EWS (economically weaker section) and 338 units in the HIG (high-income) category. The costliest homes on offer this year were priced at around 1.5 crores. Yet MHADA officials claim they were priced much less than the prevailing market rates. MHADA received 69 applications for two of its costliest apartments located in Mumbai’s lower Parel region.

“MHADA is supposed to construct affordable homes. Unfortunately, they construct homes for middle and upper middle group. There is a huge vacuum when it comes to addressing the needs of the economically weaker section group”, says Sanjay Chaturvedi, a Mumbai-based property expert and lawyer.

The situation is no different when it comes to the housing draw by Delhi Development Authority (DDA). The agency launched its 2017 housing scheme in June under which 12,072 houses were on offer in the price range of Rs 7 lakh to over Rs 1.26 crore. The urban body has received over 46,000 applications for which the draw would be held this week. Of the total number of flats, nearly 11,000 flats include those that were surrendered after the 2014 draw while around 2,000 have been lying vacant.

While it has provided over a million homes, DDA has received flak for poor construction quality and maintenance. Both development authorities have the largest land bank at their disposal. Since its inception, MHADA too has been able to build only 2 lakh homes in Mumbai region and 5.5 lakh homes in the rest of Maharashtra. While DDA has allotted 3,67,724 flats till 2007.

According to the experts, agencies like DDA and MHADA lack the bandwidth and expertise to construct and deliver quality homes. “Despite the low quality of construction the rates at which the homes are offered are too high. Apart from that homes are also built in areas where there is no proper infrastructure”, says Chaturvedi.

Many feel that the role of agencies like DDA and MHADA should be that of facilitators rather than developers.

“DDA should become a facilitator/regulator and not a developer. And allow the private sector to create housing stock and agencies like DDA should take back 30-40% homes free of cost from the private developers. This will basically achieve three objectives; social housing will be created, investment requirement will be nil and as a regulator, it will be able to ensure that the projects are executed in a time-bound manner”, says Ramesh Menon, Director, Certes Realty Ltd.

Some experts also believe that it’s time that agencies like MHADA and DDA should rather focus more on its evolution because they continue to remain an essential component of India’s housing sector.

“These agencies should have clear direction about their mandate. Depending on their mandate, the government needs to provide for funding. MHADA and DDA have almost exhausted all the land parcels belonging to them, therefore land management should also be an integral part of their mandate. Although it is right to say that these agencies should become more of a facilitators but India is not at a place where private sector is contributing enough towards EWS and LIG. Till the time private sector’s participation is not up to that level agencies like these will have to continuing building homes for EWS and LIG”, says Ashutosh Limaye, National Director – Research, JLL India.

Source: MoneyControl.com
Dated: 29th November 2017

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