Good morning, in some reaaally mood lifting news this morning, over 140K families are rejoicing because their stuck home dreams just received the much needed government funding to become reality.
Let's savour that and silently clap for the people who came back from the brink of hopelessness.
This week already looks promising in the happiness department.
😷↔😷
Rental Housing Needs A Shot In The Arm
The rental housing economy in our country can fix a lot of our housing woes in a jiffy, simply by unlocking existing resources.
Context, Please.
Per a new report, more than 11 million sold homes have remained unoccupied out of the total 110.14 million homes in urban India.
Elementary thinking will tell you that using the existing unoccupied sold stock for rental accommodation can go a long way in addressing India's housing shortage.
The Direction Is Right
To signal its intent, the government has so far launched the Affordable Rental Housing Complex (ARHC) scheme and also brought the Model Tenancy Act, 2021.
The model Act aims to overhaul the legal framework surrounding the rental housing market, enabling the formalisation of the segment - by creating a rent authority to provide a speedy dispute adjudication mechanism for the landlord-tenant ecosystem.
But There Is A Lack Of Thrust
- To unlock the potential of millions of ready to move in homes, the central agency needs to ensure that states amend their existing acts or enact a new policy, without diluting the essence of the model guidelines.
- Then, the timeline for certain dispute resolutions needs to be specified in the model Act, like disputes on withholding essential services, revision of rent and contraventions by property managers.
- While the bar on eviction has been removed by the act, the process remains as restrictive as before: eviction can be carried out only on limited grounds, and that too after taking permission from the rent court.
And A Need For Incentives
India is at the lower spectrum of gross rental yields from housing, with investors historically relying on property value escalation for financial returns in the long term.
Incentives in the form of exempting property tax for an initial predefined period, allowing additional low-cost FSI for rental housing, encouraging PPP (public-private partnership) participation, facilitating ease of capital for build- to-lease and rent-to-own residential projects, the report suggests.
Regulatory Irritants
India's much (picture a dude with hands stretched wide) needed affordable housing crisis needs more than mere financial directives and tall aspirations.
That's because the folks who need access to affordable housing the most are the ones that are not being able to get any.
Where's Your Pay Slip?
The lower middle-class and low-income segment deserve housing more than the others. Per this report, the growth (in terms of lending) is much higher in this segment, at around 25 to 30% per annum.
However, while our mailboxes receive a home loan offer once a week on an average - a function of publicly known salaries and credit scores - the folks who really need that housing loan don't have either.
In the absence of a credit score and a valid proof of monthly income, lenders are hand-tied due to the absence of a mechanism to extend credit to the neediest, despite the big talk and an abundance of liquidity in the system - so basically, we are achieving zilch.
Half-Hearted Regulatory Push
Constant regulatory insertions have burdened the affordable-housing finance companies in different ways, meaning more houses to the needy simply cannot be sold.
After being brought under the ambit of the RBI, from the earlier National Housing Bank (NHB), the multiplicity of regulatory agencies has made compliances cumbersome and costlier.
And with multiple agencies towering over mortgage firms, there seems to be more confusion and hesitancy in extending the much needed credit to affordable housing aspirants.
Word On The Street
🎙 "The housing finance field has more than returned to normal and is picking up well. Liquidity isn’t an issue. More than anything else, regulatory irritants are a major speed-breaker for the sector." says Munuswamy Anandan of Aptus Value Housing Finance.
Free Time-Tripping
This picture, taken in the 1950s, shows buses waiting to ferry passengers from Dehradun To Mussoorie.
Even today, that stretch of road has some wonderful twists, and breath taking green valleys that make one forget about a certain day of the week.
Pic: @IndianHistoryPics on Twitter.
Good News For Stuck Housing Projects
Per 2019 industry estimates, as many as 4.58 lakh housing units were facing delayed delivery across 1,509 stalled projects.
Out of them, around 141-thousand families can cheer up this year end knowing that their stuck home ownership dreams have finally come umm, unstuck.
Sweet News
Per a recent announcement by the finance ministry, a government-sponsored alternate investment fund (AIF), set up to extend last-mile funding to complete stuck housing projects, has approved around INR 23,000 crore to bail out 243 projects.
This will enable the completion of 1,41,045 stuck-in-limbo homes across the country.
Thank SWAMIH
This 'winch' fund, set up under the Special Window for Affordable and Mid Income Housing (SWAMIH), has okayed investments of INR 9,743 crore in 99 projects, while a preliminary nod has been given to 144 projects involving investments of a further INR 13,229 crore.
The fund was announced on November 6, 2019 and raised INR 10,530 crore from 14 investors, including LIC, HDFC and SBI, when it first closed in December.
The vision was to create a INR 25,000-crore fund, with contribution of both the government and other investors and it seems that the plot is bearing fruit.
Proof Of Concept?
👍 The SWAMIH fund has already completed more than 1,500 housing units in the past six months, and is currently on track to complete at least 10,000 homes every year in the next 3 to 4 years.
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There. We started this week off on a pretty positive note. To pass on the good vibes, simply wear on your smile.
Have an awesome week ahead. 💚
☕ The Crew@Ginger Chai