//Affordable housing: the new public private partnership models

Affordable housing: the new public private partnership models

The central government recently announced an all new PPP or public private partnership policy for cheap and affordable accommodation of homeless people which has the allowance of extending the government funding to an amount of 2.50 lakh per house that is to be built by the builders even on non-government lands. This policy was introduced keeping in mind the agenda of providing shelter for all by the year 2022.

The PPP policy was announced by Hardeep Singh Puri, currently the Minister of Housing and Urban Affairs and a total of eight partnership models were devised for private housing sector for investment in affordable housing division.  This policy paved a road for private investors to invest in the affordable accommodation projects on non-private lands in cities and urban regions. Puri explained later, while speaking to NAREDCO summit that the agenda of this policy is to dispense risks among builders, investors, government and banks and to the institutions and bodies who can manage those risks very well by utilizing all the resources to promote the target of achieving Housing for All.

He said that the central government is not trying to pose any restrictions by announcing this policy. Since the matters of lands are the matters of the state, the governments can devise more housing models to promote the agenda of Housing for All by 2022.

Private investment models for PPP for affordable housing on non-government lands consist of expanding the financial support up to 2.50 lakhs per housing unit in the form of subsidy interest on loans taken by bank as a prior payment to bank under CLSS division of Pradhan Mantri Awaas Yojna for Urban areas. The second model has a loan extension up to 1.50 lakhs per housing unit on private land in cases where the beneficiaries are not willing to take loans from the bank. The six out of eight models are regarding the private investment on government lands for affordable housing and they have been planned after extensive consultation with builders, states and other shareholders.

The other six models are as follows:

  1. DBT model: this model allows the private builders to build and design as well as transfer the houses constructed on government properties to public organizations. The lands will be allotted depending on minimum cost for construction. The payments are supposed to be made by public organizations depending on the milestones decided by government.
  2. Mixed-Development and Cross- subsidized plans for housing: the houses will be allocated depending on the number of houses that are proposed to be constructed on the plots allotted to private constructors.
  3. Subsidized Housing based on Annuity: the builders will put in money as opposed to delayed annuity expenses made by government.
  4. Affordable housing- Annuity plus capital grant: along with annuity expenses the builders can be waged a part of the scheme as priority payment.
  5. Direct Relationship and Ownership Housing: the promoters will straightforwardly make the deals with investors and recuperate the costs. The allocation of land will be based on per unit construction cost.
  6. Direct Relationship and Rental Housing: cost recovery is done through rental wages via the houses constructed on government spaces.

Puri also said that now it is time to take actions instead of sitting and talking.