Reforming Land Policies can make Housing more Affordable - Niti Aayog Member

Niti Aayog member Rajiv Gauba emphasised that land constraints pose a significant challenge to developing housing projects, and stressed the need for comprehensive reforms to reduce land costs.

“We should consider providing at least 10 per cent of residential land for affordable housing in our master plans, raise the permissible FARs (Floor Area Ratio) for projects to 5-6 percent from 2-3 at present, promote transit-oriented development and adopt land pooling…these measures will help reduce land costs and unlock housing supply,” he said.

Land today accounts for 50-70 per cent of total project costs, which is far higher than in comparable infrastructure sectors, he said while addressing an international conference by the National Housing Bank.

These pressures are aggravated by limited access to formal credit, forcing the developers to depend on high-cost finance, undermining project viability, he said, adding that margins in the economically weaker segment and low-income group segment are particularly low, and so, they do not attract private investment.

Observing that close to 1 Crore houses are lying vacant in the country, he said that there is also a need addressing host of issues, including strengthening rental housing ecosystem.

Besides, he said, reforming tenancy laws, rationalising municipal charges, promoting diverse rental housing models, and creating anchor funds and dedicated financing mechanisms to crowd private investment.

Improving project viability may require additional measures, like profit exemption for affordable housing projects, raising credit guarantee limits under the credit risk guarantee fund trust for low-income housing, waiving profits fees for land dedicated to affordable housing, reducing or exemption of stamp duty for affordable housing units, and so on, he said.

“Niti Aayog has, in recent months, worked closely with the Ministry of Housing and Urban Affairs and the Department of Financial Services and other stakeholders to develop a set of recommendations around these measures, based on global best practices, evidence-based analysis, and crossing sectoral insights,” he said.

He urged the Department of Financial Services and the Ministry of Housing and Urban Affairs to consider implementing these recommendations.

Speaking at the occasion, Department of Finance Services Secretary M Nagaraju said the Government has sanctioned 3 crore additional houses under PMAY.

“Of this, 2 Crore dwellings are in the villages and one crore in the cities. Thus, by 2029, about 7 Crore houses would be constructed under the scheme,” he said.

So far, nearly 4 Crore houses have been constructed under the Pradhan Mantri Awas Yojana across the country.

Under the Affordable Housing Fund, he said, National Housing Bank has disbursed concessional refinance to the tune of Rs. 60, 000 Crore till December, 2025, benefitting 5.85 lakh dwelling units in India.

Emphasising that the Government and the Reserve Bank of India have enabled policy frameworks and structural reforms to further growth and housing accessibility, Nagaraju, said, “The revisions in priority structural lending, which we have done last year, including higher housing loan limits and broader definitions, aim to boost affordable housing and overall growth by increasing credit flows to underserved areas.”

Also, the significant GST rate reductions on key construction materials are expected to make housing more affordable in the country, he added.