Government announces new PPP policy for Affordable Housing

New Delhi Sept 23: In a move accelerate the construction of houses and to achieve the target of 'Housing for All' by 2022 The central government on Friday has unveiled a new public-private partnership (PPP) policy for Affordable Housing.

Under the policy, the Private sector can invest in eight PPP
(Public Private Partnership) models of affordable housing segment.

Minister of Housing & Urban Affairs Hardeep Singh Puri has announced the policy and has said that "We are not being prescriptive or restrictive with these models. Land being a state subject, the government can come up with more models that would help in pushing affordable housing efforts further".

Under the 8 models proposed 2 models proposed include on private lands

# Extending central assistance of about Rs 2.50 lakh per each house as interest subsidy on bank loans as upfront payment under the
Credit-Linked Subsidy Component (CLSS) component of Pradhan Mantri Awas Yojana (Urban)

# central assistance of Rs 1.50 lakh per each house to be built on private lands would be provided, in case the beneficiaries do not intend to take bank loans.

The six models using government lands are:



1) DBT Model: Under this option, private builders can design, build and transfer houses built on government lands to public authorities. Government land is to be allocated based on the least cost of construction. Payments to builders will be made by the public authority based on the progress of the project as per agreed upon milestones and buyers will pay to the Government.

2) Mixed- Development Cross –subsidized Housing: Government land to be allotted based on the number of affordable houses to be built on the plot offered to private builders, cross-subsidizing this segment from revenues from high-end house building or commercial development.

3)Annuity-Based Subsidized Housing: Builders will invest against deferred annuity payments by the Government. Land allocation to builders is based on the unit cost of construction.

4) Annuity-cum-Capital Grant Based Affordable Housing: Besides annuity payments, builders could be paid a share of the project cost as the upfront payment.

5) Direct Relationship Ownership Housing: As against government mediated payments to builders and transfer of houses to beneficiaries in the above four models, under this option, promoters will directly deal with buyers and recover costs. Allocation of public land is based on the unit cost of construction.

6) Direct Relationship Rental Housing: Recovery of the costs by builders is through rental income from the houses built on government lands.

Finally, experts have hailed the move because the new policy would benefit middle class because intrest on home loans will be subsidized and it also it would boost construction of low-cost housing .