Dream home remains a dream?

The government has given directives to give 20% of apartments in all big projects  to the weaker sections of society at construction cost. This means the builders will recover cost from the middle-class. DNA finds out what will be the implications of these new DCR (Development Control Rules) on homebuyers.

New DCR are an eyewash to show that govt cares for weaker section of society
There are different aspects as to how the price mechanism operates in the real estate sector, and the new Development Control Rules (DCR) announced by the state government is not the only factor that will affect the real estate prices. There are bigger issues at stake. The DCR is aimed to encourage urban renewal in the so-called gaothan areas (Peth or old city areas). There are very few developers who invest in congested old city areas and the new rules framed will encourage the same. The 20% reservation for weaker section of society is meant for large projects in the fringe areas of the city and not inside the city areas. It is true that this 20% reservation will push developers to recover their margins from rest of the 80% home sales. This will consequently increase the property prices and the middle-class will suffer. Previously, poor people could not afford to buy homes but now, it will be unaffordable for the middle-class as well.

The Mhada (Maharashtra Housing and Area Development Authority) was formed by the state government to provide low cost houses to the middle-class, but for the last 10-15 years, it has done nothing to that effect. In my opinion, the new DCR are just an eyewash to make people believe that the government is doing something for the weaker section of society.
— Rajiv Raje, Architect & Town Planner

Govt is not clear about who falls in economically weaker section
The Urban Ceiling 1976 law was implemented by the government in an attempt to provide housing for the poor and the same was cancelled in 2007, saying that it was not helping enough. In reality, the government’s way of calculation is wrong. The big question is that though the government is bringing forward various housing projects for the economically weaker section of society, in reality, this section is not receiving benefits due to various clauses. The Supreme Court had also asked to define the weaker section. Till now, the state government does not have a clear definition of who fall in the economically weaker section.

The new rule has been introduced because of the influence of the builders’ lobby, which will ultimately reap profits. Forget dreaming of owning a house, now the middle-class people will not be able to afford one. I wonder how will this new rule of 20% reservation be regulated and implemented.
— Sahadu Repale, advocate

Govt has also increased stamp duty & municipal charges, which affect the middle-income group a lot
With this new DCR announced by the state government, the real estate prices are going to skyrocket and the burden bearer will as usual be the common man who dreams of buying a house. With the upcoming elections, I am not surprised that the ruling party will announce such policies to woo voters.
The intention of the government is to increase the real estate prices and push the burden on common man. It has also increased stamp duty and municipal charges for buying properties, which affect the middle-income group a lot. The increase in the FSI (floor space index) will depend on the actual development that will happen. With the increase in rates and charges, along with increase in bank interest rates on housing loans, it is becoming
really difficult for the middle-class group to buy a house in urban areas.   
— Dnyanaraj Santh, secretary, Grahak Hitvardhini

A section of the real estate market will manipulate these new rules to reap benefits
With the elections around the corner, the government is bound to announce new policies to get more mileage. We have laws and make new ones, but people find ways to manipulate them. So, there is a section in the real estate market who will manipulate these new rules to reap benefits. Many policies have been introduced before to control real estate prices, but to no avail. The government wants the prices to increase so that it becomes all the more difficult for the common man to own a house. For example, a salaried person who is earning Rs50,000 per month could afford to buy a 1BHK flat in the city suburbs but now the government has made it harder for them. The government announced such policies so that new avenues and strategies are created for manipulation. The 20% reservation for weaker section or these slum rehabilitation projects are just hogwash.     
— Ravi Karandeekar, real estate consultant

It will be difficult for builders to reserve 20% houses for low-income group out of 2,000 sq mt plots
As of now, there is no clarity on the announcement made regarding the new DCR. I have not gone through the actual copy in detail and it will be too early to comment on the issue. What I know about the 20% reservation is that it is meant for 2,000 square metre and above plots. It will be very difficult for the builders to reserve 20% houses for low-income group (LIG) out of the 2,000 square metre plots. I feel it should be made 10,000 square metre and above. Obviously, the builders will recover the deficit from the remaining 80% of the homes. It is going to be difficult for them to sell the flats at construction cost. Right now, the new policy looks too complex. I will be able to comment in detail only after the Credai (Confederation of Real Estate Developer’s
Association of India) meeting on the issue.    
— Shravan Agarwal, chairman, exhibition committee, Credai-Pune Metro