As of this August, the government had sanctioned only 52,666 houses for the slum dwellers against the requirement of at least one crore houses under the PMAY scheme. The progress of the scheme has been rather slow and there many factors hindering it.
Here is a look at challenges impeding the progress of PMAY scheme.
Challenge 1: How to “build” millions of new houses?
The Technical Group on Urban Housing Shortage estimated that the national housing shortage reached 18.78 million in 2012; which is why the real estate developers have been keen on highlighting the need to build millions of new houses. But going by the current pace of PMAY, with a little over 100,000 houses built, it will take hundreds of years to meet the housing shortage.
Challenge 2: Land scarcity
For building millions of new housing units, there is land scarcity. However, the Government has made efforts to unlock this land problem by providing Transfer of Development Rights (TDR) to incentivize developers to in-situ rehabilitate slums. This has proven effective in Mumbai, but the economics breaks down in smaller cities. The conditions there are not favorable as the land values are not as high, and the developers are unable to recover their costs.
Challenge 3: Bottleneck of property records
An important aspect of PMAY is the direct subsidy for individual house construction or enhancement, and interest subsidy on a home loan. However, to avail either subsidy, there is a prerequisite requirement to provide title property documents. But due to poor condition of land and property records, beneficiaries are unable to do so.
The target beneficiaries of the scheme- slum dwellers, who continue to live in ancestral homes, are unlikely to have title documents. Hence, they areending up locked out of the scheme’s benefits.
Challenge 4: Distorted rental market
The Census showed there were over one crore vacant houses in 2011, which account for nearly around half the urban housing shortage. The vast majority of these property owners are private citizens whofear losing their properties to tenants, hence they prefer to leave their house vacant, rather than offer it on rent. This reflects the underutilization of assets in the country.
There are three major policy levers that can help overcome these challenges.
To begin with, the States need to simplify the process of updating property records. This will allow people to easily obtain legal documents to their land and property in order to avail the subsidy features of the scheme and access credit, which will further enable them to upgrade their housing.
Secondly, the government needs to enable individual households who don’t have legal titles, to in-situ upgrade their housing by providing them with security of tenure.
Lastly, the states need to push through the much-needed rental reforms that balance the interests of tenants with the protection of property owners’ rights.
This step has the potential to bring vacant housing stock into the rental market and alleviate the housing shortage.