Developers lobby hard with states for sops

With each passing day making it clearer that only low-cost small houses can sell in this market, real estate developers have begun to lobby with states for concessions that will help them build such houses.

Developers, for instance, have asked the Haryana government to relax the population density norm for Gurgaon, a suburb of Delhi where they hold large parcels of land. Current rules say that builders cannot construct houses for more than 400 people in a hectare of land. Developers want the number to be doubled.

“We have approached the Haryana government for this. If accepted, this can lead to a 50 per cent increase in the number of houses that can be built in any defined area of land,” Unitech Managing Director Sanjay Chandra said. Haryana Urban Development Authority officials said they are seriously reviewing the situation.

It is learnt that developers, through their lobby groups, have made a similar request to other states as well. “We have asked all state governments and the central government to relax the density norms,” said Parsvnath Developers Chairman & Managing Director Pradip Jain.

All developers, small and big alike, have now decided to focus on affordable housing projects. While Unitech says 80 per cent of its new projects will fall under this category, DLF plans to test-launch affordable housing projects in at least six cities in the coming months.

While construction costs have come down a quarter with the fall in steel and cement prices, developers want the states also to contribute their share to bring down prices. Their organisations like the National Real Estate Development Council and the Confederation of Real Estate Developers’ Associations of India are at the forefront of this lobbying.

The builders met with some success a few days back when Uttar Pradesh decided to change its building rules to allow construction of more houses in a specified area than earlier. To make this possible, the government changed the floor area ratio (FAR) of group housing plots from 1.75 to 2.75. FAR refers to the area permitted to be used for actual construction out of the total area earmarked as housing plot.

“There are about 1,000 acres of land already allotted to the builders in Noida and Greater Noida. Due to the changes made by the Uttar Pradesh government, we will be able to build 50 per cent more houses than what we would have been able to legally construct in the same land earlier,” Omaxe Managing Director Rohtas Goel, who is also the president of the National Real Estate Development Council, said.

“We have asked all state governments to announce concessional registration charges for affordable houses. The government should provide loans at 5.5 to 6 per cent annual interest,” Jain said.

Meanwhile, Andhra Pradesh has announced stamp duty waiver for houses that cost less than Rs 20 lakh from January 1, 2009. Jain wanted other states to follow the Andhra model and allow waiver of stamp duty as well as land conversion charges to make housing more “low cost.”

Also, Uttar Pradesh has come out with a rule that developers who have not been able to pay fully for the land allocated to them, will be given land in the same proportion as the payment made by them.