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24 states/Union Territories sign pacts with Centre to implement affordable rental housing scheme

The government is extending several incentives including free Floor Space Index (FSI), concessional project finance, free of cost trunk infrastructure facilities, among others to push participation in this scheme

As many as 24 states and Union Territories have signed agreements with the central government for implementation of the affordable rental housing complexes (ARHC) scheme mooted by the Ministry of Housing and Urban Affairs during the novel coronavirus, or COVID-19, pandemic for the benefit of urban migrants and the poor and to accelerate entrepreneurship and investment in the rental housing market.

The government is extending several incentives including free Floor Space Index (FSI), concessional project finance, free of cost trunk infrastructure facilities, among others to push participation in ARHC scheme for urban poor and migrants, he said addressing a digital press conference on October 14.

“We are happy that we have received interest from 24 out of 36 states. We are hopeful that the remaining 12 states will come on board soon as this scheme benefits all states governments," Housing and Urban Affairs Minister Hardeep Puri said.

Also Read: Affordable rental housing complexes scheme for migrants: Here's all you need to know

Expression of interests (EoI) have been uploaded on the ARHC portal and the states’ websites, Durga Shankar Mishra, Secretary, Ministry of Housing and Urban Affairs, said.


These states include: Andhra Pradesh, Assam, Bihar, Gujarat, Haryana, Himachal Pradesh, Karnataka, Kerala, Madhya Pradesh, Meghalaya, Mizoram, Nagaland, Odisha, Punjab, Rajasthan, Sikkim, Tamil Nadu, Telangana, Tripura, Uttar Pradesh and Uttarakhand.

Chandigarh, Daman and Diu and Puducherry have also signed the agreement.

Also Read: Affordable rental housing complexes to comprise units of 10-60 square metres

Private players from Baroda, Bahadurgarh and Jaipur have also evinced interest for the scheme, he said, adding these can now apply as the ecosystem is now ready in the 24 states and UTs.

This initiative, Puri  said, has been taken up to provide dignified and affordable living spaces to varied groups of urban migrants/poor including industrial and construction workers, migrants working with market/trade associations, educational/health institutions, hospitality sector, long term tourists/visitors and students.

Also Read:  Centre to sign agreements with states on rental housing scheme within a month

Puri was addressing a webinar at the launch of ARHC portal and release of guidelines and guidebook on October 14.

The COVID-19 pandemic has resulted in massive reverse migration of workers/urban poor in the country. This brought issues of housing to forefront. In line with Prime Minister Narendra Modi’s call of Atmanirbhar Bharat, the Cabinet on July 8 had approved ARHC as a sub-scheme under Pradhan Mantri Awas Yojana (Urban) to provide ease of living to urban migrants/poor.

To make this a lucrative and viable business opportunity for entities, the government will provide concessional project finance under Affordable Housing Fund (AHF) and Priority Sector Lending (PSL), exemption in income tax and Goods & Service Tax (GST) and Technology Innovation Grant for promotion of innovative technologies in ARHCs.

States or UTs will provide use permission changes, 50 percent additional FAR/FSI free of cost, single window approval within 30 days, trunk infrastructure facility and municipal charges at par with residential property.

According to guidelines issued by the housing and urban development ministry, ARHCs have a two-pronged approach. First, the existing vacant government funded housing complexes will be converted into ARHCs through concession agreements for 25 years.

The concessionaire will make the complexes livable by repair/retrofit and maintenance of rooms and filling up infrastructure gaps like water, sewer/septage, sanitation, roads. States/Union Territories will select concessionaire through transparent bidding. Complexes will revert to urban local bodies (ULB) after 25 years to restart next cycle like earlier or run on their own, the ministry had said.

Second, special incentives like use permission, 50 percent additional FAR/FSI, concessional loan at priority sector lending rate, tax reliefs at par with affordable housing will be offered to private/public entities to develop ARHCs on their own available vacant land for 25 years.

The ARHC scheme will be applicable for consideration and funding till the PMAY (U) Mission period which is March 2022. All projects under ARHCs shall be exclusively used for rental housing purposes for a minimum period of 25 years.

This initiative emanated from the plight and migration of workers during the COVID-19-infused lockdown. Absence of affordable rental housing in major cities led to mass exodus of migrants that had zero income during the lockdown. Thus, the government had to shift gears of their Housing for All initiative and include affordable rental housing as part of it.
Vandana Ramnani
first published: Oct 14, 2020 10:37 pm
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