Next disruptive move should be for Housing the poor

To put things in perspective, number of total households was 19.2 crore (13.8 crore rural and 5.4 crore urban) in 2001 and 24.7 crore (16.8 crore rural and 7.9 crore urban) in 2011 census.

Ownership pattern even in Urban India has grown over the years, suggesting, we as a civilization, have been obsessed with Owning our houses. Consequently the biggest pressure on lack of quality housing is being exerted by drop in rented household percentage in the Urban India.

Now let us look at the Quality aspect of these self owned houses. A basic consumer appliance, like a TV set is suggestive of a basic lifestyle today. In rural Indian household about 95% live in self owned house but only 33% of them possess a TV set. These households are also living in alarmingly smaller space. About 40 % of all of them have just one room in the name of a house. The Square footage available to these households is one of the lowest in the world, about 107 Sqft per person in Rural areas and about 124 in Urban. Kumar’s EPW paper also provides data for the average area of each dwelling unit (house) which was 431 and 422 sq.ft for rural and urban areas. In terms of per person area, urban areas are slightly better off, with an average area of 124 sq.ft in comparison to 107 for rural areas. A room of 10x10 ft would mean an area of 100 sq.ft.

Compare it with a developed economy like United States, where by the year 2015, the median size of a completed single-family house was 2,467 sqft, while that of a multi-family unit was 1,057 sqft, as per United States Census Bureau.

Quality of life that these houses can offer certainly puts forth numerous questions. Analyze this with practically dismal City level Sewer/drainage connection and piped water supply, the way majority of Indians live paints a sordid picture.

The LANDscape of Housing shortage in India

As per the report submitted by a technical committee to the Ministry of Housing and Urban Poverty Alleviation (MHUPA), India’s urban housing shortage is pegged at nearly 18.78 million households in 2012. Urban housing shortage is prominent across the economically weaker sections (EWS) and low income groups (LIG) which together constitute over 95 percent of the total housing shortage. The shortage amongst the middle income groups (MIG) and above is estimated at 4.38 percent. This estimated shortage also takes care of unfit or squatter houses that the people are living in, that need to be replaced by the livable stock.

Over the last two decades Urban India got entangled in a sort of vicious cycle that neither the Government bodies nor the market forces could manage to break off with.

“Demand for Urban housing grew---------Urban planning remained constrained-----------Superficial scarcity of urban land-------------Land prices spiraled---------------House prices became unaffordable-----------Pressure on Household savings------------------Less tax collection-----------------Lower investment in Infrastructure--------------------Slowdown in overall economic activity-------------------Pressure on Rural economy fuels migration------------------drives urban housing demand”

About 40% of a group housing project cost can be attributed to Land price. Lack of Urban planning in our cities ensured that land remained a favorite commodity for hoarders, be it Private or Public players. Continued political resistance to free up land for Public good is a matter of high level research in our country.

Houses in Urban India stand second to none when it comes to the favored hoarding commodity. This can be made evident by looking at the vacant house data in Urban India.

“2.47 crore (1.36 crore rural and 1.11 crore urban) houses are lying vacant in India. This is almost 90% of total number of rented houses in the country”. (Source: India's Residential Rental Housing, Arjun Kumar, EPW 2016)

Club it with the fact that between 2001 & 2011, ghost houses in Indian cities grew by nearly 70%. That definitely was the decade of bull run in real estate fueled by plethora of black money. Even the low cost or affordable houses are plagued with this problem of non occupation. As per Government’s own estimate about 2.45 Lakh houses built under various Govt backed programs like JNNURM, Rajiv Awas and Indira Awas Yojna are lying vacant for various issues pertaining to allotment.

When we compare this with the estimated shortage in Urban India, about 1.9 Crores, equation looks dirt simple.

The Ghost houses are the biggest indicators of economic disparity prevalent in the country as well. Somewhere we collectively failed to see Land & housing as a resource and like many other commodities be it Food grain, cattle or cash we allowed our people to hoard them. Just for example, some of the Real estate companies in our country are such mammoth Land sharks, owning thousands of hectares of a valuable public resource spread over the length & breadth of country. Even city development authorities have been behaving in similar pattern going on an overdrive to acquire more & more land around their jurisdiction areas, consuming all their development budget in buying land, and also begetting the ills of Leapfrog development.

Hoarding of Land is the biggest of the legacy mindset evils of License Raj era that was on rampage during last two decades. Situation has slowly started to take a turn for the better after recession, with supply exceeding the demand in most of the primary markets. Land prices have been cooling of in most of the cities and real estate sharks are failing to monetize their land banks even to keep the ball rolling.

What all can disrupt it further

There can be two major disruptors-

Legislation and Technology.

Let us look at what the right legislation can do about it. RERA for the real estate sector has already been widely discussed and appreciated for its disruptive impact. Suddenly the entire housing industry looks to be driven by the end users in place of developers. The legislation for the first time in the history of Indian real estate has made consumer the real king.

But this is not going to take care of housing your poor with dignity. On the contrary the provisions of RERA are expected to push the prices up as scrupulous players are soon going to vanish from the market while serious real estate players will have to keep the quality parameters high to be able to satisfy customer’s aspirations.

Only the Government can bring in a Public rental policy of sorts in the country. We need to strongly discourage people from hoarding the houses and incentivize them to free up the existing housing stock. With economy showing signs of fast growth, cost of Capital as well is going to move downward. Going forward, we need to design policies that enables us to

“Free up the Capital, free up the Land and unlock the vacant houses. “

There can be a host of measures-

One may think of putting some sort of Inoccupancy Tax on holding a vacant house, so that, purchase of second house is made more expensive to afford.

A large number of houses are owned by affluent NRI’s. Profiling for these houses can be done and should be taxed for keeping vacant.

Government can launch a National Housing Bank, where one may lease his/her house for a stipulated period and earn Rental income through the Government. Government in turn can allot these houses with due grading/profiling to the citizens. In fact same has historically been done with Land and crop, so it’s a tested model.

Along with choice of letting the houses out in open market, this would help unlock numerous vacant houses. With National Housing Bank underwriting such housing projects the Investment scenario will surely look more lucrative as well.

Government must also legislate to improve the quality of houses. The minimum square footage per person for a livable space must be made an elementary law. Almost to the tune of National Food security bill. India of today needs a Space security bill. A space for every Indian to live with high quality community life. This is the minimum what we need to ensure. Going a step further every Aadhar card holder must have a guaranteed shelter, food, health & education.

Economists need to come up with an alternative for Subsidy model. May be for once, for a complete paradigm shift we may eat up some from our defense budget that has been on a continued offensive each year on a trot. Imagine just a fraction of it if goes into social security can hugely strengthen India from within.

Government may tighten the Land Use clauses much more to curb Sale purchase of Land for quick short term profiteering.

Technology can play a disruptive role

India is due for a massive digitization of Land records, which has potential to revolutionize the transfer of land titles. The National Land record modernization program was initiated in 2008 with a target completion slated for 2016. But as Land is state subject, many of the Indian states have not shown required level of interest in completing the project in due time. The Project has also undergone a cost overrun of about 54 Billion Rupees.

It also has potential to free up massive tracts of land under litigation throughout the country. This in turn will bring down the Land prices.

Technology in housing have often been associated with luxury so far. Cutting age home automation and security devices have already been used for past few years. Can it also help us find cheaper & better houses?

Property portals have already eliminated the role of middle men which were a cost. They are also geared up for using modern tools like VR (Virtual reality) for making Property search experience much more credible.

Technology is also helping in making construction lot more cost efficient. BIM (Building Information Modeling) is one such disruption in recent years that has totally transformed the way we design our buildings. There is huge potential in Pre fabrication as well. Smarter architects are designing lighter, space efficient, sustainable and connected buildings for a much improved community living. For every one person today indulging in “Ego Architecture” and there is someone doing responsible “Eco Architecture” as well, offering even the poorest of the lot a living space with dignity.

These Eco designers are capable of bringing in fresh perspective to mass scale housing and must be given a free & fair hand for making things better.

Adaptive architecture is another realm that has potential to change the way we view our building stock. Buildings should be deeply integrated with our lifestyle. Keeping an Office building vacant for 15 hours in a day with such massive operation cost calls for an alternative.