CHENNAI: Can the Centre’s proposal to tweak the definition of ‘affordable housing’ scheme, to include bigger and more expensive projects within metro cities, revive the flailing real estate sector? Developers in Tamil Nadu are thrilled by the prospects of the new announcements, for it reduces GST substantially to a mere one per cent, and makes first-time buyers eligible for a government subsidy under the PM Awas Yojana.
Currently, to avail these benefits, a home must be priced less than Rs 45 lakh and its carpet area must not exceed 60 square metres. Now, the government is planning to increase that amount to Rs 50-55 lakh. “If the price range is widened, more projects will come under the scheme. It will create demand in the market, thereby boosting sales,” says A Shankar, chief operating officer of Jones Lang LaSalle.
There is, however, a hitch. As per the new rules passed by Tamil Nadu, only homes with a carpet area less than 40 square metres in the city and 60 square metres outside the city can be categorised as affordable. This means, unless the State government revises its rules, developers here will not be able to enjoy the full benefits of the new measure being taken by the Centre.
“The move will have a big impact if the State government increases the carpet area limit to 60 square metres within the city and 90 square metres outside the city, for a project to be deemed affordable,” says S Sridharan, chairman of the Confederation of Real Estate Developers Association of India.
Sridharan says representations have been made to the State government, to increase the carpet area to the limit set by the Centre. “They have agreed to consider our request.” Still, the move is unlikely to completely revive the housing sector, though the affordable housing market will get a boost.
Shankar says projects in location such as Manapakkam, Sholinganallur, Madhavaram, Medavakkam, Porur, Maduravoyal, Ambattur, and Thalambur would come under the affordable housing category. “Horizontal expansion of the city is likely. A positive impact on development of infrastructure by the government can also promote expansion,” says Sridharan.
The Builders Association of India wanted projects up to Rs 1 crore to be called ‘affordable’. “We still welcome the proposed move,” says the association chairman S Rama Prabhu. “Currently, builders are paying 5 per cent GST on projects costing Rs 50 lakh. Now, this will come down to one per cent. Promoters will benefit from this. Sales could go up by 60 per cent in suburban areas and in the metro.”
Areas to witness stronger sales