CREDAI has demanded that banks should fund developers to buy land for development of affordable housing projects.

By Abhay Harish Shah, Realty Quarter

In its budget wish list, Realtors apex body CREDAI requested that banks should finance developers to purchase land to develop affordable housing projects. It has also indicated that all legislation should have the same concept of affordable housing.

“Land as a value of the project comprises 40% of the overall project cost. Under the introduction of RERA you will not be able to sell until you have obtained all approvals, meaning you need financing either through the promoter equity or private equity,” said CREDAI in its budget memorandum.

Typically, NBFCs or private equities finances land, it said, but added that developers’ expense is up to 25%. “The banking system is required to bridge this divide. Funding by commercial banks for the land was allowed by RBI until 2008 and should be resumed as soon as possible for affordable housing,” said CREDAI. Also, the association which has over 10,000 members as developers, also requested for standardization of affordable housing concept.

“As per Section 80 IBA, the GST Act, the DEA Notification of 14.11.2017, the Ministry of Housing and Urban Affairs in regard of CLSS and RBI currently adopts concepts of affordable housing that differ among themselves,” said CREDAI.

It proposed that the CLSS (Credit Linked Subsidy Scheme) definition of affordable housing should be widely relevant to all government agencies. CLSS includes affordable housing in the city of Chennai, Delhi, Kolkata and Mumbai, with a floor space of no more than 60 square meters, and elsewhere in 120 square meters. CREDAI also requested an improved income tax rebate for principal and interest payments on home loans.