By: Pranay Vakil, Chairman, Praron Consultancy
Track2Realty Exclusive: As corrective steps we need to form a regularized official body to maintain consistency and transparency. There were only two cities in the world which were over populated and this has gone up to 29 cities with dense population in past one decade.
It sets the alarm bell ringing to push in efforts and draw attention from the government and town planners. They have to focus on listing out the remedial steps and ensure its timely execution. According to me, there are four curative ways to ease the burden of urbanization as follow:-
It is a type of property that derives more than 80 per cent of its revenue from dwelling units. As per the research, 20 per cent of the cities’ population is the floating population which squeezed in the city for job prospects and is not willing to buy property. This class of people will be interested in rental property as they can earn the wealth and buy the property in the town where do they belong to as long term investment.
This would be the mentality around the world and deal is justified. Another 30 per cent of the population may not buy the property due to lack of justified collateral to take loan and 20 per cent may be willing to pay rent but fail to earn above required income group.
I have not heard of a single developer who has shown interest in developing the rental housing projects across the country. There is lack of dedicated rental projects in the country due to uncertain laws and its enforcement.
Foremost problem arises with illegal tenant issue. There are tenants who stay beyond the tenure fixed up and deny to vacant at end of the tenure. The litigation discourages the developer to build up rental properties as why would somebody create this situation for himself.
Hence, it is essential to amend laws to ensure fixed tenure period under signing off the contract. Any avoidance will be strictly punishable and penalized to erase this messy situation.
Secondly, the yield is susceptible to lower return which demotivates builders to enter this space. Government should grant high FSI which will reduce the land acquisition price and that will substantially cut down the cost of projects. Hence, the benefits can be passed on to the end users. All this norms have to be followed jointly by RBI, regulatory boards and governing bodies to make it successful and encourage affordable housing.
…..to be continued
