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Land pooling policy: A boost to housing construction, job creation

The unlocking of this huge parcel of land, estimated to be around 55,000-57,000 hectares can potentially lead to development of around 9 million housing units

By: ENS Economic Bureau | New Delhi | Updated: May 27, 2017 1:21:23 am
land pooling policy, what is land pooling policy, delhi land pooling policy, delhi rural villages, india news, delhi news, indian express news While it took almost two years for Delhi government to notify this, experts are of the opinion that implementation of the policy will be crucial in attaining the expected benefits.

Earlier this month, the Urban Development Department of the Delhi government issued a notification declaring 89 rural villages out of the 95 as urban villages, thereby providing a big boost to the operationalising of the Land Pooling Policy in Delhi that was stuck for nearly two years. While the notification will result into unlocking of an estimated 55,000-57,000 hectares of land, an ICRA report on Friday said that the policy will result into creation of around 2.9 million economically weaker section (EWS) dwellings with an average size of 30 sq mt and over 6 million other housing units with an average size of 1,000 sq ft or 93 sq mt.

ICRA says that the government’s notification will have a positive impact in the medium to long-term as it is expected to boost housing construction. “The increase in the housing construction is expected to lead to significant job creation in the construction sector. With around 59,835 Ha to 73,750 Ha in built-up area expected to be developed over the medium to long term, there is a huge potential for growth in the housing construction,” said the report. The report also points that the creation of a housing stock will underpin the affordability for the common man as influx of such huge inventory of houses will keep the prices under check.

Rough calculations show that the unlocking of this huge parcel of land can potentially lead to development of around 9 million housing units. While the ICRA report points that around 2.9 million housing units will be for the EWS category (unit size of 30 sq mt), Shubham Jain of ICRA said that if the remaining units are assumed to be of 1,000 sq ft each then another 6.2 million housing units can be developed in future.

ICRA feels that the development may also lead to a pick up in the real estate sector. “With many positive facets like participative development, employment generation, increase in housing stock and rationalisation of real estate prices, the Land Pooling Policy is a big positive for the real estate sector in Delhi. Given the multiplier impact, we expect overall pickup in investments and economic activity. Moreover, it will facilitate in achieving the vision of the Central government of attaining ‘Housing for All by 2022,” said Shubham Jain, vice-president and sector head, ICRA.

However, there are some challenges surrounding the positivity and enthusiasm. While it took almost two years for Delhi government to notify this, experts are of the opinion that implementation of the policy will be crucial in attaining the expected benefits. Given that the development of an area and setting up housing is a long drawn process, some of the potential challenges that may arise will range from acquisition of left out land pockets, political risk, execution risk, issues due to differences in land valuation and timely development of basic infrastructure by the authority, said the ICRA report.

The notification from the state government earlier this month comes nearly two years after the Ministry of Urban Development notified the land pooling policy in May 2015 to address the housing woes especially in the affordable category in the National Capital Region. Apparently since 2015, the DDA had been awaiting notification from the Government of NCT of Delhi to classify the agricultural area within the proposed urban extensions as ‘urbanisable’ and so with the latest notification, DDA will be able to operationalise the land pooling policy.

While the MoUD policy had many firsts such as participation of private players and housing for EWS category as the developers are required to retain 15 per cent of the units for that section, the DDA land pooling policy that was framed in 2013 and got MoUD’s approval in May 2015 also provides for increased floor area ratio (FAR) of 400 that will promote vertical growth; private participation that may put an end to encroachments on vast expanse of land; better infrastructure in the form of roads and sewage treatment plants at every housing complex and benefit to farmers.

How does the pooling work

Under the land pooling policy, a group of owners with small parcels of land will come together and give their pooled land to the DDA for development of basic infrastructure. Anyone with more than two hectares of land can avail the benefits of the policy and become a ‘developer entity’ (DE). After the DE first gives his land to the DDA, the agency will develop it by providing the necessary infrastructure in the form of roads, parks, power supply and sewage treatment plants and return 48-60 per cent of the land to the owners.

As per the policy, two categories of land pooling exist: category I includes land owners with land parcel of over 20 hectares and category II, with land holding between two and 20 hectares. Once the authority develops the infrastructure on the land, the developer entity falling in category I would get 60 per cent of the land pooled and the remaining will be retained by DDA. Those falling in category 2 will get 48 per cent of developed land. The DDA would use the retained portion of the pooled land for creating the associated infrastructure as well as for public and semi-public areas.

Additionally, once the land is returned to the DE for construction of housing units, the developer will be allowed to avail increased FAR of 400. FAR determines the total built-up area allowed on a certain plot area. This, an official said, would contribute to vertical growth and in turn, reduce congestion. A government official told that buildings of up to 20 storey may be constructed and will act as an added incentive to the developer. However, developers will also have to provide a portion of the development for the EWS and at least 15 per cent of the units will have to be retained for EWS category.

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