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Indian Real Estate News : Mumbai
Reserve 20% area for low-income housing
Source: The Times of India Oct 07, 2013
A year after the state stalled its draft notification following objections from developers, it is set to issue a the final notification making it mandatory for developers to reserve 20% of areas of more than over 2,000 sqm for affordable housing.

While the chief minister is yet to give his nod, the final notification may see some more changes pertaining to the minimum plot area and incentive FSI offered to developers under the scheme. Sources said the government may increase the plot area on which the scheme can be implemented from 2,000 sq m to over 3,000 sq m by increasing the incentive floor space index The government is learnt to be firm on purchasing the 20% per cent reserved area in form of land or flats from the developers on cost of construction and not market rate.

Under the notification, developers preparing a layout of more than 2,000 sq m will have to set aside at least 30 to 50 sq m for low-income group flats area to construct flats for low income group, and which in turn would be to be handed over to the state housing board at construction cost. The board in turn, will develop the plot and sell it to needy persons through a lottery system.

The state's urban development department had cleared this notification last year, but it had to be reworked after the high court struck it down this year on technical grounds.

But developers say the proposal in the current form is not a feasible option adding that combining low-income projects with luxury apartments will not be commercially viable as the low-income buyer will find it hard to pay for the high maintenance associated with such luxury projects.

Said Sunil Mantri, CMD of Sunil Mantri Group and president of National Real Estate Development Council, "The major issue is 2,000 sq m of land is too small an area to create housing for higher and lower income groups. It should be 10 acres. Though their land values are not high as Mumbai and Maharashtra, other states have put a cap of 5%. Maharashtra is asking for 20% reservation. It is not logical." The government's intention to provide affordable housing can be eased if it make it mandatory for developers to provide servants accommodation in luxury projects planned on 2,000 sq mts plots."

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