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Unkept Promises of Affordable Housing

Owning a house is a dream of every individual, but with land and apartment prices going higher and higher, Goans are finding it difficult to fulfill it. The need for housing is growing with the growth of families as people cannot accommodate themselves in their ancestral houses. Successive governments failed to fulfill their promise of making housing affordable. On the contrary, the government went on increasing tax on house purchase, which currently works out to 6.9 per cent (for houses below Rs 50 lakh) to 7.4 per cent (for houses upto Rs 1 crore). Besides, infrastructure tax of Rs 100 per square metre is also charged by the government. Flat owners also have to pay 14 per cent service tax on common services expenses, club usage, etc payable to the central government. A person buying a 100 square metres flat at the rate of Rs 50,000 per square metre ends up paying around Rs 7,000 by way of taxes to the government.

The recent decision to impose VAT on construction will only lead to increase in the prices of flats. Though the government has exempted flats upto Rs 20 lakh from VAT, hardly anyone will benefit from this exemption as flat prices are in excess of Rs 35 lakh for a single bedroom flat at the minimum level. The high rates of apartments, ranging from Rs 35,000 per square metre (lowest) to Rs 2.5 lakh per square metres (highest), are due to various factors including high costs paid by the builders for procurement of land, coupled with higher taxes and higher labour costs and equipment hire charges. Most of the builders have been coming up with frills attached housing projects and the common Goan seeking to buy a house has to pay for the amenities which he would have not wanted, and these frills add to the costs. Buying land and constructing a house is often even more difficult, given the high cost of land and construction. Despite the construction witnessing a slump in sales the rates of apartments and land have not much fallen in the state.

The state government has announced in every budget ever since it came to power in March 2012 that affordable housing would be provided to the Goans but these announcements have remained at the proposal stage and not moved beyond that. Among the promises made by the government in the successive budgets were promotion of group housing schemes, houses for people at the rate of Rs 12,000 per square metre, but none of the proposals have taken off. Many people find it unbelievable that the government could offer flats at the rate of Rs 12,000 per sq m and wonder when these flats would be ready and possession given. The Housing Board, the government-owned entity that was formed to ensure construction of affordable houses, has almost become defunct, though government has been announcing that crores of rupees having been made available to it in every budget to build houses for the people in lower income and middle income groups.

With the state government failing to notify the Regional Plan for the state, the available land in the development zone is being sold for a premium and the builders have been passing the land acquisition cost along with premium paid and the government taxes on to the buyers. Government indecision on the Regional Plan is pushing up the prices of land and apartments. The government ought to notify the Regional Plan at the earliest, following which a large area of land would be released, which in return could bring down the prices of flats and tenements with more housing projects coming up. The present government had promised to notify the Regional Plan within three months after it came to power but even after over three and half years there are no signs of the government after taking care of suggestions and objections and the RP being notified. Its correction continues to be deferred every now and then.

The government must take positive steps to ensure that more land is released for housing and land banks are created so as to enable housing projects to come up in the state. At the same time the government should also monitor the prices of the real estate so as to arrest skyrocketing prices through rational pricing. Early rectification of the Regional Plan 2021 and its notification would go a long way in deciding the future of housing and other developmental projects in the state which in a way could give shape to economic growth with every stakeholder knowing which project could come where. The government should also ensure that taxation regime does not hurt the people in realising their dream of owning a house. The government should promote group housing without frills so as to help the common man own a house and fulfill his dream.

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