With the aim of attracting private players in the affordable housing sector to meet the 'housing for all' target by 2022, the government has unveiled a new public-private partnership (PPP) policy that allows central assistance up to Rs 2.5 lakh per house built by private builders, even on private land.

The policy also includes opening up potential for private investments in affordable housing projects on government land in urban areas.

The policy provides for various PPP options for the private sector to invest in the affordable housing sector. The six models using government lands are:

  1. 1The direct benefit transfer model: Under this option, private builders can design, build and transfer houses built on government land to public authorities. Government land is to be allocated based on the least cost of construction. Payments to builders will be made by the public authority based on progress, as per agreed upon milestones, and buyers will pay the government.
  2. Mixed development cross-subsidised housing: Government land to be allotted based on number of affordable houses to be built on the plot offered to private builders, cross subsidising this segment from revenues from high-end house building or commercial development.
  3. Annuity-based subsidised housing: Builders will invest against deferred annuity payments by the government. Land allocation to builders is based on unit cost of construction.
  4. Annuity-cum-capital-grant based affordable housing: Besides annuity payments, builders could be paid a share of the project cost as upfront payment.
  5. Direct relationship ownership housing: As against government-mediated payments to builders and transfer of houses to beneficiaries in the above four models, under this option, promoters will directly deal with buyers and recover costs. Allocation of public land is based on unit cost of construction.
  6. Direct relationship rental housing: Recovery of the costs by builders is through rental incomes from the houses built on government lands.

The two PPP models for private investment in affordable housing on private land include extending central assistance of about Rs 2.5 lakh for each house as an interest subsidy on bank loans as upfront payment under the credit-linked subsidy component of Pradhan Mantri Awas Yojana (Urban). Under the second option, central assistance of Rs 1.5 lakh will be given for each house to be built on private land, in case the beneficiaries do not intend to take bank loans.

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