Defining Affordable Housing

“Affordability” as a concept is very generic and could have different meanings for different people based on differences in income levels. Affordable housing refers to any housing that meets some form of affordability criterion. Different countries have defined affordable housing to present the economic potential of an individual buying a house. In the United States and Canada, a commonly accepted guideline for affordable housing is that the cost of housing should not be more than 30 percent of a household's gross income. Housing costs here include taxes and insurance for owners, and utility costs. If the monthly carrying costs of a home exceed 30–35 percent of household income, the housing is considered unaffordable for that household. Defining affordable housing in India is a difficult task given that at every square kilometre of the country, the dynamics of the market are different. At KPMG and CREDAI, we have therefore broadly defined affordable housing in India for Tier I, II and III cities based on three key parameters:


Solution That Can Work Out To Supply To This Demand

Effective Use Of Available Government Land

    • Land parcels currently in possession can be used for development, thereby reducing the cost of land
    • Government can enter into joint ventures with developers with land as equity

Land Banking

    • Purchase of large strips by State Governments / Agencies
    • Distribution of land to private developers through a transparent process


     • Relaxation of FSI norms to reduce per flat land cost
     • FSI is an effective tool to provide a cashless subsidy to builders

Cross Subsidization

    • Joint development of MIG, LIG and EWS flats – MIG to subsidize others
    • Built-up space covering LIG and EWS to be sold / rented by Government agency; developer can be
    • Allowed to sell MIG flats at market rates

Redevelopment / Rehabilitation

    • Increasing availability of prime land by redevelopment / rehabilitation

Single Window Approval For Projects

    • Delays incurred in project approvals result in substantial cost overruns.
    • A single window will help reduce delays and contain costs
    • Reduction in approval related costs

Subsidizing Construction Costs

    • Reduction / exemption / deferment of taxes and duties on construction materials
    • Subsidy to developers for R&D in new low cost materials and technologies
    • Subsidy to developer in view of employment generated
    • Lower cost of borrowing for development of affordable housing projects - can be achieved if Government
    • Agencies have a participatory interest in the project and guarantee the loans

Sales Tax And Stamp Duty

    • Exemption from sales tax and reduction in stamp duty

Huge Demand In The Coming Future :




    • While the basic necessities of life – food, clothing, and shelter – are increasingly becoming a luxury and unaffordable, luxury items such as televisions, mobile phones, refrigerators, etc. are become affordable! While we are often amazed at the progress our country has made when we see an auto rickshaw driver with a mobile phone, we fail to notice that he is still living in a slum-like dwelling. It is understandable that economic growth leads to rise in income but this has led to even faster rise in property prices leaving it unaffordable for majority of population. Affordable housing is expected to have a positive by improving basic quality of life. Problems like traffic congestion, air quality, commute times, etc. can be resolved by providing proper housing facilities to the weaker sections of the society. While the concept of affordable housing seems to be a simple solution to current housing woes, its execution remains complicated due to the unclear policy framework. To make affordable housing work in India, it would require “will” from all the stakeholders by slightly adjusting their interests towards a wider social cause.

Green One Project, Hyderabad

     • After Mumbai ,Delhi and Banglore; Hyderabad will be a city that will be short of 378,000 units of housing By 2015.

Our affordable cost housing project is spread over the area of 25,000m2 near Hyderabad, India .It is one of the very first kinds in India where renewable sources of energy are trusted upon

Reference : Kpmg