The concept of creating Special Residential Zones (SRZ) as a measure for providing affordable housing is likely to gain momentum, with builders holding discussions and making representations to the government.
Builders’ Association of India (BAI) recently submitted a memorandum to Minister for Urban Development Parithi Illamvazhuthi appealing to the State government to take initiatives on creation of SRZs.
For a successful model of making affordable housing a reality, there is a need for better coordination among private developers, Central and State governments, says K.K. Raman, executive vice-president, DLF Southern Towns.
He says it is possible to provide affordable housing in the price range of Rs.6 to Rs.12 lakh in SRZ.
Chennai Metropolitan Development Authority Vice-Chairman Susan Mathew said the planning body was yet to have any discussions on SRZs.
SRZ is a notified geographical region free of domestic taxes, levies and duties with special development rules to promote large-scale affordable housing.
The Confederation of Real Estate Developers Association of India (CREDAI) has been seeking the intervention of the Central and the State governments in using SRZ as one of the means for promoting affordable housing. “The taxation is the most important constraint for the Central government in creation of SRZ,” said Prakash Challa, president of CREDAI - Tamil Nadu.
Revenue loss for the government on account of concessions such as excise duty exemptions on steel and cement for SRZ can actually make affordable housing possible, he said.
The creation of SRZ would require the formation of a Special Purpose Vehicle (SPV) with equity holding of the government and private developers. The government could come up with land as equity and private developers would have cash as equity, said Mr. Raman. The Central government could give SRZ approval for the SPV and make a notification. The funding can be arranged by the private developers with varied options available.
The SRZ would contain units in the range of 300 sq.ft to 750 sq.ft. with a minimum threshold on the number of units. The administration of the Special Economic Zones (SEZ) would be managed and monitored after the approvals are recommended by the respective State and cleared by the Board of Approvals at the Centre.
The funds of the Jawaharlal Nehru National Urban Renewal Mission could be used providing connectivity to the SRZs.
The process of notification of the SRZs could be on the same pattern as the current notification process for SEZs and have an FSI relevant to the infrastructure standards.
A maintenance company could also be formed and the rental model can be one of the options, said M.K. Sundaram, Secretary - Regional Advisory Group, Construction Industry Development Council.
This is in accordance with the National Housing and Habitat Policy, which aims at achieving affordable housing for all with appropriate fiscal concessions for housing and infrastructure, he says.