THE BIGGEST ENEMY OF RESPECTABLE HOUSING FOR THE POOR IN UTTARAKHAND

 

THE BIGGEST ENEMY OF RESPECTABLE HOUSING FOR THE POOR

At the cost of sounding politically incorrect especially in the light of the Rs. 32/- per Diem debate, I will use the term `Poor’ and not ‘Economically weaker sections’ or `the ‘under-privileged’. I will call a spade a spade and get on with the debate about the issue at hand, shelter for the urban poor.

The cost of land on Sahastradhara Road in Dehradun is  Rs 2900/- per square meter by government circle rate .  If I bought  two acres of land  from the government at its own rate for Rs. 235 lakhs.  With stamp the total cost would be about Rs  2.5 crores.

If I then decided to help the government in its task of providing housing for the poor, I would get 230 low cost three storied flats sanctioned from the local statutory body and build them.  The flats could be two small rooms with a toilet and a kitchen with a total area of some 300 -320 sq feet. The cost of construction would be 2 lakhs per flat. The total cost of services and common things such as Boundary wall, roads, electrical connection, Government charges  etc would be another Rs 25000/- per flat.

The cost of land per flat is Rs 1.1 lakhs, cost of construction Rs 2 lakhs, cost of services and electricity Rs 25000/- per flat . Total would be Rs. 3.35 lakhs.

If I did this honestly and finished in one year, cost of finance (interest) would be Rs. 100 lakhs. This would be Rs  45000/- per flat. If a profit of 10% i.e. Rs 40000/-  is also allowed to me, the sale price of the flat would be Rs 4.2 lakhs. With stamp duty the house could be given within Rs 4.5 lakhs.

This can very easily happen and at least 10 people I know would be willing to do it.  We can have 230 needy people of this town have a house for Rs 4.5 lakhs. If the government invested its own money and did not charge Interest and profit, the house could be built and sold for Rs 3.35 lakhs.(Even cheaper if it waived development charges, royalty on River bed materials such as sand, aggregate and stone, VAT on some items). The government will still make about Rs 82 lakhs as stamp duty.

If anyone advertises a scheme to sell houses of 300-320 sq feet for Rs 4.20 lakhs. He will get thousands of applications because the cheapest house with clear title, correct land-use and proper services like water, electricity, sewage, drains, parks etc is not available. The cheapest flat available anywhere else would be for Rs Twenty lakhs. Government has not made any plots or houses available for a long time now and when it does; its prices are never very low.

Let us see the real situation. It does not happen like this. There is a government speed breaker at each step, corruption is possible at each step. Government policy comes in the way and most importantly the disinterest of everyone involved in the above process makes this impossible. Let us dissect it. 

HURDLE  NO.1 Government is not giving or selling land for housing for the poor. It can acquire land and money for all things  like offices, industry etc but not for poor peoples housing. Some years ago it had acquired some land on Bye-Pass road for `housing’ but later returned it without doing anything under pressure from the property dealers. There is no provision in the master-plan for any land anywhere for creating housing for the poor 

The developer has to find and buy land at market rate which is sometimes 50% to 70% higher, No bank will give him finance for a project where there are visible government hurdles. He has to invest his own money.

HURDLE  NO.2 The most important government hurdle are the bye laws which don’t allow a density of more than 60 dwelling units on an acre (even for poor peoples’ housing) and the cost of land per flat shoots up to four times the estimate above.(after being raised from 125/hectare to 150/hectare).

HURDLE  NO.3  Lets assume we get the government to agree to allow us higher density, then they would need parking for 120 cars which in the open would need a quarter of the 2 acre plot, or it would require stilt parking and therefore a frame structure and the cost of the structure would go up to 1.5 times per sq foot and you would have to construct a third more area, These factors of frame structure and extra construction will take the cost of the construction to 1.95 times.

Let us assume that the government will let us have our way and will let us make the assumption that these people will have no cars and if they do they will park them in front of the house, or the government will allow us to have a relaxed parking norm of say 1/3rd of the regular housing.

HURDLE  NO.4  The government will ask to give 6 m wide internal roads, huge setbacks of 9 metres and  7.5 metres. The trouble is that in subsistence level housing , a place to live with dignity with wife and children is more important, safety is important but some some frills can be done away with.  DENSITY, ROAD WIDTHS, SETBACKS, PARKING are rules that need to be done away with for housing for the poor. 

HURDLE  NO.5 The other road block is that the government will take one year to sanction the project which means the interest cost will also go up by 50 %  (@ 14% for one year on land value).  In this government will treat the developer like Bhu-Mafia, profiteer and a cut throat businessman and they will make him run from one pillar to post for clearances from everybody (which is in fact is their own task). The N.O.C.’s required are from PWD, Fire Department, Jal Sansthan, Neighbours, Nagar Nigam  and some others.

HURDLE  NO.6  The government will ask me to workout the electrical load of these 230 houses and buy a transformer to take the load, buy the poles to get electricity from some distance, pay a large fees for installation, reduce voltage and distribute reduced voltage at my own cost to 230 flats and collect electricity dues from each one and deposit every month. If  10 people don’t pay on time, everybody loses electricity.  The cost of getting electricity to everyone will be more. An agency will have to be created which will read meters and collect electricity charges.  Initial cost difference is Rs 10000/- per flat. There will be  a recurring cost too.

HURDLE  NO.7  The government will refuse to give filtered water connections and it will ask me to dig my own tube-well, set up a treatment plant and supply lines.  The cost is Rs 4000/- per flat

HURDLE  NO.8  It will also refuse to take away sewage. Now they want a Sewage treatment plant installed inside every housing complex instead of a simple toilet tanks. It will ask me to build public facilities like community hall etc to be given free to people in my land at my cost for the people, all this has a cost Say Rs 20000/- per flat.

In this way , because of the governmental hurdles the price of the flat goes up from Rs 4.1 lakhs to say 9.0 lakhs and this is without paying a single penny for as  corruption money .

If any developer has to go through what I described above and still make a profit of Rs 40000/- per flat, he would much rather buy the land, keep it for  two years,  not even lift a finger and sell it after two years,  He will still make a comparable profit.

There is no distinction in the government while sanctioning housing projects for the rich and the poor. If there is political will, it can be done overnight. We have seen some customary noises being made in the recent pre poll announcement bazaar.

Can I ask what the governments Housing department is doing if not making houses for the poor? It is not giving free housing to the poor. It is not subsidizing it, it is not facilitating it by way of providing land, services and components and advice.  The criminal thing it is doing is to not even allowing people to have housing at a fair cost. It is just standing in the middle of the path. If the govt. comes forward, many promoters will surely come forward. The news reports are openly saying that Awas Vikas Vibhag of Uttrakhand is toothless.

The govt. has forgotten about providing affordable shelter to the poor for which it has a department. It is in fact working against the poor and anyone else who is willing to help them. We do see with regularity the removal of `unauthorized tenements’ that the people are forced to build because of poverty and no help from anywhere else.

I would like the reader to decide who the enemy of the housing for the poor is.

Param Jigyasu

 

PURPOSE OF THIS BLOG

A blog is not about a story,it is about a thought process or a continuing train of thoughts. I have a simple middle class urban existence in a small town. Like everyone I am exposed to a large no. of ideas and things every day. I am witness to the results of Government Policies both State and Central. I am witness to the changes in the corporate world, the new things and services that are available to us. I am witness to the vast marketplace that this world has become, Things from all over the world are available right here. I am also witness to the greed of just about everyone in the government machinery. I am witness and almost a victim of the devious ways of the companies which want to take out money from everyone's pocket without giving goods and services commensurate with the money.  There is nothing new in this thought that keeps coming back to me is that if every body delivered exactly what they charged for or did exactly what they were supposed to do, rendered the exact change,did no corruption and remained happy to live within their means: life would be uncomplicated and all of us would be happy.  Almost every day I come across instances where the Government, some company, some bank, some vendor or some common folk are blatantly making a fool of the others , or doing some thing completely unethical or doing something which is harmful to the environment.  Sometimes people both vendors and consumers are unaware of the harmful consequences of some acts.( like Halwais (Sweet sellers) using excessive artificial color in the sweets. (Color is almost always toxic, but consumers in small town and villages often do not know this)  It is the purpose of this blog to bring to the fore some of these issues big and small to the public knowledge. its not as if the readers of this blog wont know these things already, I feel some of us often do not attach enough importance to it and I want you to.