All I want is a room somewhere

DNA hosted a discussion on affordable housing and the obvious related problems Mumbai faces in terms of land shortage, skewed development, high prices and various government schemes which promise a lot but often sadly deliver nothing. The question is — is affordable housing just a pipe dream? Is it a possibility in Mumbai?

Senior editor Ranjona Banerji moderated the discussion, held under the aegis of DNA Conversations. Those who took part in the discussion (to be carried in two instalments) were Pranay Vakil, Pankaj Kapoor, Mayur Shah, Sandeep Runwal, Neera Adarkar,  Sitaram Kunte and Rajan Jayakar

Pranay Vakil (PV): A few days ago, the Maharashtra Housing and Area Development Authority (Mhada) decided to sell 3,884 flats. How many applications do you think they got? Over 5 lakh. In Delhi, they put out 5,000 affordable flats and received about 7 lakh applications. This shows that there is an inherent demand if the price is right and delivery guaranteed. These were not expensive flats — about 500-600 sq ft flats, which cost roughly Rs17 lakh. Let’s differentiate between affordable and low cost housing. A Rs2 crore flat is affordable for someone whose income is Rs50 lakh per annum. You can say that even a Rs50 lakh house falls within reach of 70% of Mumbaikars whose income is an average Rs7 to Rs10 lakh a year. I would say an affordable flat between 500 and 1,500 sq ft should be priced between Rs17 and Rs50 lakh.

Mayur Shah (MS): A survey was done in all Indian metros to define affordable housing. At least 55% thought Rs5 to Rs15 lakh was affordable, 15% Rs15 to Rs20 lakh, 10% Rs20 to Rs30 lakh, 10% Rs30 to Rs50 lakh and the rest Rs50 to Rs100 lakh (mainly south Mumbai).

Neera Adarkar (NA): Affordability would depend on income, cost of construction plus cost of land, and on a person’s accessibility to loans. An MMRDA ex-planner says the average income of people in Mumbai is Rs12,000 a month – 50% of this population earns only Rs6,000 a month. If affordability is defined as 60 times the monthly income, then the cost of a tenement cannot be more than Rs3.6 lakh to Rs7.2 lakh. How are we going to provide that kind of housing? People want to pay. Look at the response to the Mhada flats. The Nagari Nivara Parishad promoted by Mrinal Gore wanted land under Urban Land Ceiling from the government. They appealed to people to deposit demand drafts of Rs10,000 each. They though they might collect Rs7 to Rs8 crore. They got Rs90 crore. These were one lakh families eligible under the Co-operative Housing Societies Act. This means people want affordable housing.

Ranjona Banerji (RB): If you set aside Rs8 lakh as an average for the low-income group, even flats at an average of Rs35 to Rs50 lakh unfortunately are not available in the current set-up.

Sandeep Runwal (SR): I’m still confused between low cost and affordable housing. As a developer, affordable housing primarily means low-income and middle-class. In Thane, flats are in the range of Rs10 to Rs30 lakh. If you have to build a basic flat of 300 sq ft flat, put in the cost of construction at Rs1,000 a sq ft assuming that the land cost is zero plus the FSI restrictions. Unless affordable housing is separated from other residential categories, it is not possible to provide housing in that range. Mhada can do it as it has a lot of land and gets an FSI of 4.

Pankaj Kapoor (PK): I would say people choose residences close to the workplace. There is affordability and aspiration attached to this. Every segment finds the product available not fitting with the aspirations. In 2001, the average travel time from work place to home was 65 minutes and the rate Rs2,000 a sq ft. Now, the travel time is 80 minutes and the rate Rs4,000 a sq ft. Not only people are more inconvenienced, the high rates have made them ineligible to purchase a property. Mumbai needs FSI of 4 to 6 to really provide cheaper housing. Higher FSI is given to commercial buildings like for Information Technology where 1,000 sq ft is occupied by 10 people as against residential houses with maybe four people. Does it mean that those 10 people in 1,000 sq ft will not have any impact on the infrastructure?

Sitaram Kunte (SK): I would like to share the government’s concerns. As per the planning commission estimates in the 10th Five year Plan, there will be a deficit of 24 million homes in the country and 99% of that deficit lies in the EWS/LIG category. A government committee under HDFC chairman Deepak Parekh tried to define affordability. In the low-income group, affordability is defined in terms of 48 months of income and for high income it is 60 months’ income. That figure is derived largely from the RBI guidelines to give loans. EWS is measured to apartment sizes of 300-600 sq ft and 48 months of loan. Using these criteria, a large section of population is priced out. In fact, Parekh has talked of “shelter poverty” where one can make enough money to eat and other sundry expenses but cannot afford a home. It’s alarming that we have a class of people who can afford everything but are in need of shelter.

MS: The higher the floor space index, the higher the cost. We are trying a rental housing project for the government in the Mumbai Metropolitan Region. It is not working out. It is not just FSI — we need connectivity to the hinterland.

Rajan Jayakar (RJ): There was a good amendment to the Mhada Act which said tenants could become owners of a property by paying 100 months rent. The matter is now in the Supreme Court. If the order is passed in favour of tenants, then those in the island city, where the Act is applicable, have a better chance of owning a house in their lifetime. The main litigation before the apex court is now the increase in rent. It is a kind of ping pong story. When the government wanted to increase rent rates, the tenants went to court. Fali Nariman pointed to this ridiculous rent rate frozen in 1940 — what incentive will the landlords get out of it? The apex court said we will scrap it. In came the Maharashtra Rent Act where landlords were allowed to increase the rent by 4% every year. So, if you are paying Rs100, you will now pay Rs104. Landlords definitely did not agree, saying it was not possible to maintain the property at this rate. Now, the apex court has to either scrap it or pass an order that would boost rental housing.