Mint Article - low income housing

Interesting article this morning (July 28, 2014) on renewed interest from developers in low income / affordable housing -  from leading developers like the Mahindra Group, Ajmera and Shapoorji Pallonji. With more financing available (from several HFCs like MHFC focussed on this segment) and an enabling government environment, we believe that this sector should see many more such plans over the next year.

Mint Article - July 28, 2014

DBS Launches New Project - Umang Vatwa

On 26th June 2014, affordable housing company DBS (Design Build Serve) announced a new project named "Umang Vatwa" that will be built in Ahmedabad, Gujarat.

The project will provide both 1 RK and 2RK flats, starting at INR 4.99 lakh. Located close to the railway station and providing modern amenities which include 24/7 water supply, Umang Vatwa is the latest project from DBS that Micro Housing Finance Corporation will partner with to provide housing finance solutions to customers. More information about the project can be found here.

Customers looking for finance options can contact our Manager Kashyap Patel on 9925045276 to check MHFC loan terms and conditions, availability and  general inquiries.

Bookings for the project opened on 12th July 2014. For more information about the project, call the toll free number: 1800-123-6007

Budget 2014-15 - impact on low income housing

Firstly this is a government that has in its manifesto a "housing for all" objective - by 2022 in fact - and thus there are major expectations of several important measures, immediate and over the next few months, that will promote and support this critical sector. 

In this budget (2014-15), there were some specific measures :

1. FDI can be brought in fairly easily (usual restrictions on min amount and size of project waived) for projects which commit at least 30% for low cost affordable housing (not defined but am sure clarifications will be issued shortly). This will benefit private developers and add another source of capital - which might be useful as financing land purchase is difficult domestically; 

2. Rural Housing Fund (run by the NHB) allocation to go up by Rs 2,000 cr to Rs 8,000 cr. This is the refinance scheme which provides funds to HFCs at a lower cost - while the rates are attractive, and can be valuable in helping EWS / LIG families in rural areas own a home, the issue for most HFCs (esp for newer ones like MHFC) is that this scheme has an onlending cap (2.5% currently) which makes it operationally not viable. We believe the extra allocation to the scheme is very useful, but to make it really effective and to encourage widespread utilisation, the cap should be withdrawn or raised so that it is viable for lenders as well. 

3.  Most critically, and whats seems very positive, but where details awaited,  the FM has proposed setting up a Mission on Low Cost Affordable Housing anchored in the National Housing Bank, under which Rs 4,000 crores has been allocated for the NHB - and where the aim would be to increase the flow of cheaper credit for affordable housing to the urban poor/EWS/LIG segment.

In general, the FM also stated the openness of the Government to examine other suggestions that would spur the sector reflecting that this would be a priority. So all in all, while nothing very specific and possibly immediate, there does to be a general willingness to make positive changes in the sector and further detailed measures could possibly be announced shortly in line with the overall guidance provided in this Budget speech.