Bring down land prices for affordable housing: Niti Aayog

In view of the high cost of land being the major constraint in rapid expansion of affordable housing, the Niti Aayog has made the case for taking steps to bring down land prices to give a push to the Centre's housing scheme. The government think tank made its recommendations in its 'Three Year Action Agenda, 2017-18 to 2019-20', released by Finance Minister Arun Jaitley on Thursday.


"A key constraint on rapid expansion of low-income housing is high cost of land. This issue turns even more important from the viewpoint of low-rent housing, which is critical to accommodating migrant population without creating slums," it said.


It also noted that a key factor contributing to inflated land prices in India has been the flow of illicit money into real estate. "Therefore, attacking black money would have the important beneficial side effect of bringing land prices down and making housing more affordable for low-income families," it said.


The Niti Aayog also noted that an important factor encouraging the flow of black money into land is high stamp duty. "Working with states to lower this duty would help bring land prices down," it added.


It also listed a number of factors on the supply side that have resulted in very high value of property in urban areas. The Aayog said due to the Urban Land Ceilings and Regulation Act, 1976, large chunks of vacant land have disappeared from urban land markets. Even though most of the states have now repealed this Act, many large pieces of land remain tied up in litigation. There is a need to take steps to release such land pieces for commercial use, on a priority basis. 


The Aayog also noted that many sick public sector enterprises (PSEs) own large pieces of unused land in prime urban areas. Closure of these sick units can help bring substantial land into the market. Further, central and state governments also own substantial urban land that has not been put to any use and is subject to encroachment. Monetising such land could finance infrastructure and other critical expenditures while also making the land available for housing and other uses.


Scarcity of horizontal space can also be countered by expanding space vertically through the construction of taller buildings, it said.


Niti Aayog took cognizance of the fact that removal of these constraints will take time and cooperation by states since urban spaces and land issues fall under the jurisdiction of the states. "Nevertheless, a beginning in this direction must be urgently made. States must be sensitised to the benefits of policies that would help bring land prices down," it said.

Written by The Realty Paper

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