Union Government announces new PPP Policy for Affordable Housing

Sep 23, 2017 10:00 IST
PPP Policy for Affordable Housing

The Union Minister of Housing & Urban Affairs Hardeep Singh Puri on 21 September 2017 announced a new PPP Policy for Affordable Housing that allows extending central assistance of up to Rs 2.50 lakh  for each house to be built by private builders even on private lands.

The policy seeks to assign risks among the government, developers and financial institutions and to those who can manage them the best besides leveraging underutilized and un-utilized private and public lands towards meeting the Housing for All target by 2022.

The two PPP models for private investments in affordable housing on private lands include:
Central assistance of about Rs 2.50 lakh per each house as interest subsidy on bank loans as upfront payment under the Credit Linked Subsidy Component (CLSS) component of Pradhan Mantri Awas yojana (Urban).
Central assistance of Rs 1.50 lakh per each house to be built on private lands would be provided in case the beneficiaries do not intend to take bank loans.

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This new policy gives eight Public Private Partnership (PPP) options for private sector to invest in affordable housing segment. Among these, six options call for using government lands. These 6 PPP options are:

• DBT Model: Under this option, private builders can design, build and transfer houses built on government lands to public authorities. Government land will be allocated based on the least cost of construction.
• Mixed  Development Cross –subsidized Housing: Government land will be allotted based on number of affordable houses to be built on the plot offered to private builders.
• Annuity Based Subsidized Housing: Builders will invest against deferred annuity payments by the Government and land allocation to builders will be based on unit cost of construction.
• Annuity-cum-Capital Grant Based Affordable Housing: Builders will be paid a share of project cost as upfront payment.
• Direct Relationship Ownership Housing: Under this option, promoters will directly deal with buyers and recover costs. Allocation of public land will be based on unit cost of construction.
• Direct Relationship Rental Housing:  Recovery of the costs by builders is through rental incomes from the houses built on government lands.

Under these six PPP models, beneficiaries can avail central assistance of Rs 1.00 to Rs 2.50 lakh per house as provisioned under different components of Pradhan Mantri Awas yojana (Urban).

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