The Hindu 18.02.2013
Developers of middle-income housing to get incentives under new guidelines
A year after the finance minister announced in the Tamil Nadu legislative assembly that the government would facilitate developers to build more low-income and middle- income group housing, norms have been framed to enable it.
According to the guidelines, which are under the final stages of review, apartments with dwelling units of 700 square feet, would be classified as middle-income group (MIG) housing.
Developers who build apartment complexes dedicated to MIG housing would be permitted to build 30 per cent more than what is currently allowed. The permissible FSI — floor space index, a ratio that determines the maximum buildable area in a given plot — is 1.5 in normal cases, but in apartments dedicated to MIG housing, it would be enhanced to 1.95.
However, a State government source said, the prices of these apartments would not be regulated to meet the affordability criteria as defined by the government of India. For middle-income groups, the price of the dwelling unit has to be less than five times the household’s annual gross income to remain in the affordability bracket.
The reasoning is that the higher FSI in itself would bring down the land cost of each unit, which on many occasions is as much as, if not more than, the construction cost. Secondly, the government thinks it would not be practical to regulate prices.
Responding to this proposal, K.P. Subramanian former professor of urban engineering, Anna University, said: “there is no guarantee that an increase in FSI will bring the price down. Price is determined by a complex set of factors. Second, alongside this FSI increase, investment and attention must be paid to improving infrastructure; otherwise we will only burden the city further.”
M.K. Sundaram, former chairman of the Builders Association of India, Southern Centre, said that “this is a welcome move as long as the increase in FSI is limited to the growing peripheries of the city.” Any increase within the city would affect existing infrastructure”. He also remarked that that “increasing the FSI would not necessarily bring down the selling price of an apartment.”Apartments with dwelling units of 500 sq. ft. are categorised as low-income group (LIG) housing and those with 300 sq. ft. are classified as economically weaker section housing (EWS).
In 2009, the government had enhanced the FSI for developers constructing LIG and EWS housing to 30 and 50 per cent respectively. However, this incentive did not attract many developers.
