Thesis report_PG_Navabharathi

Assessing variable F.A.R as a tool for developing Inclusionary Housing model: A case study of Chennai

Thesis submitted in partial fulfillment of the requirements for the award of the degree of

Masters in Urban and Regional Planning

By T.N.Navabharathi Scholar No. 2017MURP005

School of Planning and Architecture, Bhopal Neelbad road, Bhauri Bhopal (MP)-462 030 May, 2019 1

Declaration I, T.N.Navabharathi, Scholar No.2017MURP005, hereby declare that the thesis titled Assessing variable F.A.R as a tool for developing Inclusionary Housing model: A case study of Chennai, submitted by me in partial fulfilment for the award of Masters in Urban and Regional Planning, at School of Planning and Architecture, Bhopal, India, is a record of bonafide work carried out by me. The matter/result embodied in this thesis has not been submitted to any other University or Institute for the award of any degree or diploma.

Signature of the Student Date: 13.05.2019 Certificate This is to certify that the declaration of T.N.Navabharathi is true to the best of my knowledge and that the student has worked under my guidance in preparing this thesis.

RECOMMENDED _________________ Guide Dr.Sheuli Mitra

ACCEPTED ___________________ Dr.Nikhil Ranjan Mandal Head, Department of Urban and Regional Planning May, 2019, Bhopal

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Acknowledgement I would like to express my gratitude and appreciation to all those who gave me the possibility to complete this thesis. A special thanks to my thesis guide Prof. Dr. Sheuli Mitra for her suggestions and encouragement to do my thesis especially writing in this report. I express my sincere thanks to our coordinators thesis coordinators Dr.Amit Chatterjee and prof. Arti Jaiswal for their constant support since the beginning of this semester.

I would like to thank the other faculty members for giving their inputs at all the stages of the work for its constant progress. I would thank our all faculty members, especially Asst.prof. Paulose N. Kuriakose for constantly motivating me to work harder for getting good results as well as encouragement. I would like to appreciate the guidance given by the other supervisors as well as the panels.

I am grateful for the authorities and officials in the Chennai Metropolitan Development Authority and Tamil Nadu Housing Board who provided me with the valuable data without which the research would have been incomplete. Also I thank the people of Chennai for answering my queries patiently. I would like to extend my gratitude towards all my classmates especially Meghana Mandadi, Vignesvar Jag, Arvind Gifty, Bushra Saba, Athulya Satheesh, Sharmeela Kale, Shraddha Chavan, Saloni Khandelwal constantly supporting me to finish my thesis.

I would like to thank my elder brother and my parents for their encouragement and motivation throughout my thesis. I would like specially thank my friends Gomathi Priyanka and Aishwarya K.V from Chennai for supporting during my site visit.

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Abstract Urban development policies in India imposed low Floor Area Ratio (FAR) in cities to reduce densification. But it increased the unmanageable spatial expansion and land use transformation of urbanized areas which is one of the main consequences of urbanization. Rapid urbanization in Indian cities rendered urban centers very dense and decreased the area’s developable land. The picture of urbanization includes the combination of formal and informal settlements of the cities. Land scarcity and rising property demand in urban areas increased the cost of developable land and housing units which affects the affordability level of low and moderate income groups for purchasing housing units. Lack of formal market availability increases the development of informal urban settlements. People who are unable to afford housing in formal markets are forming their own informal settlements (slums and squatters) in the accessible vacant lands and making urban land more scarcer. These kind of informal settlements lacks the basic facilities such as roads, street lights, water and sewerage network. Similarly, the areas furnished with adequate urban facilities have high land prices.

Many countries in the world uses Inclusionary Housing (IH) models to increase the affordability level of low and moderate inocme groups. IH provides long-term affordability for housing units without any external sources especially from government organizations. IH used as a tool to increase the home ownerhip in western countires. This thesis address the issues behind the low reach of formal housing market in the various regions of Chennai city. The corporation boundary is taken as a site limit for further study, which has 200 wards as of october, 2011with various densities throughout the corporation boundary. Insufficient F.A.R in high dense areas and low land cost in

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periphery pushes the development to the outskirts. This unplanned settlement makes it difficult to provide development authority with infrastructure and urban services. Due to lack of basic urban amenities, the newly added GCC wards has abudant developable land with low land price as compared with old wards.

The direction of growth pattern of the city region is understood through spatial analysis in GIS. Residential plots from four different wards in different localities were selected for developing Inclusionary Housing models. Ownership of selected plot and type of housing supply are the important parameters for the site selection. Housing development in Chennai city region is basically through government sector, private sector or in Public Private Partnership. The sale price of housing units are highly affected by infrastructure availability and other neighbourhood developments. So there is a need to assess the dependency of land and housing market carefully based on the housing demand for different socio-economic categories in specific neighbourhood areas.

This thesis helps to derive the Inclusionary Housing models along with appropriate F.A.R in the selected neighbourhoods based on the housing demand for various socioeconomic categories. The developed Inclusionary Houisng models provides the basic frame work for all type of housing supply in Indian cities. It also considers the capacity of infrastructure to cater the population while utilizing the maximum permissible F.A.R. Finally the theoritical models are arrived to cater the demand and affordability of socio-economic categories in that particular neighbourhood. The developed Inclusionary Housing models explicitly satisfies both developer and buyers need.

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Table of contents Declaration

i

Acknowledgement

ii

Abstract

iii

Chapter one: Introduction

01

1.1

Introduction

02

1.2

Background study

06

1.2.1

Homelesness

07

1.2.2

Housing market

07

1.2.3

Land markets and Informal settlements in urban areas

08

1.2.4

Policies and Subsidies

08

1.2.5

Development regualtions

08

1.3

Need of the study

09

1.4

Aim, Objectives, Methodology

11

Chapter two: Literature study and case study

13

2.1

Role of FAR in urbanization

14

2.2

Restricted FAR as reasons for low reach of formal market

15

Scarcity of marketable land parcels

16

2.3.1 Rising Costs

16

2.4

Type of housing market

16

2.5

Locational value of housing

18

2.6

Cost of constructed space as per FAR

18

2.7

Inclusionary Housing

19

2.8

Inclusionary Housing in United States

22

2.9

Inclusionary Housing in Australia

24

2.10

Inclusionary Houaing in Dhaka, Bangladesh

25

2.11

Charkop, Mumbai

26

2.3

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2.12 Ahmedabad

27

2.12

Housing development models of Rajasthan

27

2.13

Research questions

30

2.14

Inclusionary Housing model

31

Chapter three: Study area profile Chennai, Tamil Nadu

33

3.1

Greater Chennai Corporation (GCC)

36

3.2

Population density

38

3.3

Permissible FAR for residential buildings

40

3.4

Spatial distribution of population in GCC

42

3.4.1

GCC population in 1991

42

3.4.2

GCC population in 2001

42

3.4.3

GCC population in 2011

42

3.5

Population Growth Rate from 1991 to 2001

44

3.6

Population Growth Rate from 2001 to 2011

44

3.7

Residential property and land price escalation

46

3.8

Housing development in Chennai

48

3.9

Income eligibility

48

3.10

Role of Private Sector in housing market

50

3.11

Transformation of Chennai Housing Market

52

3.12

Inclusive Housing

53

3.13

Existing Floor Area

53

Chapter four: Site selection for Inclusioanry Housing models

55

4.1

Selected wards

56

4.2

Disaggregated Housing demand

57

4.2.1

Ward 149

57

4.2.2

Ward 86

57

4.2.3

Ward 126

57

4.2.4

Ward 198

57

5.3

Land price in selected wards

58 vii

4.4

Cost outlay for housing units

58

4.4.1

Building works

58

4.4.2

Infrastructure works

59

4.4.3

Total cost

59

Chapter five: Housing development models

61

61

5.1

Socio-economic distribution in selected wards

63

5.2

IH Model one

Development by private developer on private land

64

5.2.1

Model one: Estimated market price

65

5.2.2

Model one: Affordability gap

65

5.2.3

Model one: Cross Subsidy

66

5.2.4

Model one: Land cost to F.A.R

66

5.2.5

Model one: Ground coverage

66

5.2.6

Model one: Saleable cost

67

5.3

IH model two

Development by government on government land

68

5.3.1

Model two: Estimated market price

69

5.3.2

Model two: Affordability gap

69

5.3.3

Model two: Cross Subsidy and profit

69

5.3.4

Model two: Land cost to F.A.R

70

5.3.5

Model two: Ground coverage

71

5.3.6

Model two: Saleable cost

71

5.4

IH Model three

Development by private developer on government land

72

5.4.1

Model three: Estimated market price

73

5.4.2

Model three: Affordability gap

73

5.4.3

Model three: Cross Subsidy

73

5.4.4

Model three: Land cost to F.A.R

74

5.4.5

Model three: Ground coverage

75

5.4.6

Model three: Saleable cost

75

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5.4.5

Model three: Ground coverage

75

5.5

IH model four

Self-Finance Scheme (SFS)

76

5.5.1

Model four: Estimated land price

77

5.5.2

Model four: Affordability gap

77

5.5.3

Model four: Cross Subsidy

77

5.5.4

Model four: Land cost to F.A.R

78

5.5.5

Model four: Ground coverage

79

5.5.6

Model four: Saleable cost

79

Chapter six: Inference and conclusion 6.1

Relaxing the FAR

82

6.2

Substituting capital for land

82

6.3

Housing affordability

82

6.4

Role of the developer

83

6.5

Role of the Urban Local Bodies

83

6.6

Policy on Inclusionary Housing

83

6.7 Conclusion

85

References 87 Annexure

93

List of graphs, tables, maps and figures

94

Basic calculations for arriving Dwelling Unit cost

96

IH models (one, two, three and four)

100

CONTENTS ix

x

01

INTRODUCTION 1

1.1 Introduction

Urban population in Asia has increased from 678 million in 1980 to 1.85 billion in 2000 (UN-Habitat report 2005). China and India are the leading countries for rapid urbanization in this region. The acceleration of urbanization in India began after the development of mixed economy with the private sector in 1990 to remove economic backwardness, poverty, and unemployment. After the contribution of the private sector, cities became an economic platform for innovation, production and trade in addition to formal and informal employment. The development of mixed economy increased the growth of the secondary sector in the nation.

Factors such as socio-economic employment opportunities in urban areas attracts people from disparate places to the urban location which leads to the unpredictable and unplanned growth of the city. These urban areas are composed of high density built structures and vary from rural regions in its activities such as socio-economic, residential, commercial and industrial etc. There has been as rise in land use transformations majorly into unplanned paved surface. Land use transformation to urbanized and/or urban sprawl is one of the major effects of urbanization. Spatial expansion of cities became a major challenge for providing urban infrastructure and services in past few decades. In past few decades cities are facing tremendous population growth due to migration and results in high density.

Scarcity of urban land in city core, high property and rental values, lower land-consumption in the city core pushes the population to the city periphery especially low and middle income category. Horizontal settlement growth is observed in the outskirts due to the low land price which makes difficulty in providing infrastructure and urban services for the government. Also it increases the cost of infrastructure development which results in lack of infrastructure facilities in the city periphery. These factors became the major reasons for informal housing market. Increasing the FAR in various localities will make the land affordable especially for low and moderate income categories which became the major concern in making Inclusionary Housing (IH) in many Western Countries.

2

Introduction

60 50

50

42.3 40

35

37.8

27.7

30

23.6 18.9

20

12 10 0

5 1951

7

1961

1981

No of metropolis

2001

2011

Percentage of population

Graph 1: Number of Metropolitan cities and percentage of population in India Source: Government of India (2011)

Inclusionary Housing(IH) policies will make the long-term affordability for low and moderate -income housing without any support from the external soources such as government funds or subsidies. Lack of cross-subsidies and low FAR in Indian housing market became the major issue for developers in providing low and moderate income house less than the present market price. Unequal access to housing drives sprawling development patterns; worsens traffic congestion; pollutes air quality; increases taxpayer dollars spent on basic infrastructure; and decreases racial, cultural, and economic diversity (Ewing, Pendall, and Chen 2003). Various sucessful IH models in western countries improved the home ownership and spatial management of the cities.

Inclusionary housing refers to a range of local policies that tap the economic gains from rising real estate values to create affordable housing, tying the creation of homes for low- or moderate-income households to the construction of market rate residential or commercial development.

3

Image used for representational purpose 4

5

1.2

Background study

Indian cities are facing tremendous strain due to population growth in past two decades, as rate of increasing migrants for better employment and economic opportunities. According to the census 2011, the urban population in India is 32% and it is predicted to increase by 50% in 2050. Urbanization trends in India did not considered the infrastructure facilities and environmental conditions which pushes the country towards sustainable urban growth. Low floor Area Ratios were imposed in the city centre to reduce densification through urban development policies. But it increased the unmanageable spatial expansion of the urban areas which made inefficient urban services in the many city peripheries. Many state governments to revise their City development Plans.

In the recent land use trends of India, made the integration of land-use planning with transport corridors through (Transit-oriented development) TOD concept as permitting higher FARs along major transit corridors. Many of these corridors are of India, made the integration of land-use planning with transport corridors through (Transit-oriented development) TOD concept as permitting higher FARs along major transit corridors.

Many of these corridors are majorly pass through brownfield areas which are found underutilized (Shenvi A and Slangen R, 2018). Urban redevelopment in cities in India has mostly been limited to slum redevelopment or rehabilitation of deteriorating residential areas through FAR incentives. The Smart Cities Mission is the first national-level urban program in the country, to propose an initiative to undertake retrofit and redevelopment of urban areas. The most common form of mixed-use development in Indian cities is retail and office uses on the ground floor and residential uses on the upper floors.

3%

5% 12%

HH in homeless condition (0.53 million) HH living in obsolescent houses (2.27 million)

80%

HH living in Non-serviceable katcha (0.99 million) HH living in congested houses (14.99 million)

Graph 2: Estimated Urban Shortage in India by housing type (Millions) – 2012 Source: Report of Technical Group (TG-12) on Estimation of Urban Housing Shortage 2012, Ministry of Housing and Urban Poverty Alleviation 6

Introduction

1.2.1

Homelesness

Every year, millions of people migrating to urban areas for better life style, job, education, business. Migrants are from different socio-economic background, they resembles the particular soci-economic groups. The high income group people who earns more than a lakh per month can easily adopt all the avaialble facilities in urban areas.

Meanwhile, the lowest and moderate income groups struggle to statisfy their basic needs. The low income groups cannot able to afford the dwelling units in formal market due to high cost of land and housing units. Formal housing markets in Indian cities are far away from low and moderate income groups. This became the major reason for the formation of informal settlements. In other hand, due to high market price highincome people are forced to purchase the middle-income housing units followed by middle -income housing are occupying low income housing units. Several reasons became a hurdle for low income categories to purchase a new house. Slums and squatters are the most identified form of informal settlements in Indian cities. Various schemes are introduced by central and state governments to reduce the homeless throughout the country. In some cases, low-cost housing units are constructed with Public- Private partnership(PPP) where the land is provided by the government and the devlopment by private developer.

1.2.2

Housing market

The housing market is presently dominated by private sector and the contribution of government is limited to some extend due to the lack of financial and manual resources.

Government intendend to increase the home ownership through private participation.

After the participation of private sector, the supply of low and moderate income housing were reduced. Formal housing market is highly dominated by private developers where they earn high profit. Private developers neglected to supply the low and moderate income housing units, even with high demand recorded. The profit from low and moderate income units are very low. Government and semi-government organizations came forward to statisfy the need of low income hosuing units. In a large scale, the urban housing market is neglecting the low budget housings due to scarce land in core urban areas and the high land prices. The cost of the materials, transportation and labour charges also increasing the unit cost in urban areas. The profit from low cost housing is much lower than the high cost housing development. Above reasons reduced the participation of private developers in low cost hosuing development. Public-Private partnership has increased the supply of low cost housing to some extend. But still the demand is not fullfilled by the suppliers which leads people to make informal settlements in their neighbourhood.

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1.2.3

Land markets and Informal settlements in urban areas

Inadequate housing supply to a specific socio-economic category leads to the formation of information settlements such as squatters and slums in the urban areas. Those slums and squatters spread as pockets throughout the city regions. The land prices in city core or near the CBD region became unaffordable for poor people to afford their own dwelling units. People tend to form a kind of infromal settlements near their work place to reduce the transportation cost. Low- cost housing supply became a major challege in developing countries especially in the expensive urban localities.

1.2.4 Policies and Subsidies Periodically revised guidelines and policies helps every HouseHolds (HHs) to own a house in the country. Government supports to every households of the country to own a house through various schemes, loans and subsidies. This supporting facilities from the government varies based on the geographic location of the neighbourhood and socio-economic background. Eventhough the homelessness in urban areas are rapidly increasing year by year due to rapid increase in urban population and lack fund from the central and state government organizations which became major hurdle to achieve the goal. “Housing for All -2022� is one of the most prominent scheme of the central government which is supported by all state governments in the country. According to 12th Technical Group (TG-12) the urban housing shortage was recorded as 18 million which higher than the census report. External fund from state and central governments for such kind of hosuing development is inadequate. Many countires in the world uses Inclusionary Housing as a new concept to solve the affordability of lower- income groups in the expensive localities of the city.

1.2.5 Development regualtions The hosuing cost varies depends up on the land price of the locality and the available neighbourhood facilties. The core area of the city usually results with high land price coupled with low FAR which does not reach the affodabiltiy level for middle and lower income categories. Low FAR in high density neighbourhood is also became one of the main reasons for housing shortage in urban areas. Horizontal sprawl happens in cities if the FAR is low which makes urban land more scarce and this became the major reason for high land price. FAR is used as a growth management tool in many developed nations. Inclusionary Hosuing along with high FAR makes successful housing models in many western countires.

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1.3

Need of the study

The high property prices and scarce urban land made low income category people to search houses in informal sectors which also made them to settle outside in the periphery. Because the serviceable land became unaffordable for many categories. The revenue obtained through the new or additional built up areas are not utilised for infrastructure development. FAR incentives plays relatively major role in managing the urban growth and funding the infrastructure through the new revenue generation is not taken into account in India. FAR incentives are recent planning techniques in India where Mumbai tend to experience this approach during 90s. Presently ULBs are utilizing the FAR as a fiscal tool to induce the development in the demarcated areas. This spatial growth became the major challenges for providing the urban services in India.

Increasing the reach of formal market

Scarcity of marketable land parcels

Inclusionary Housing

Due to low F.A.R High property prices in city region

Low reach of formal market

Cross-Subsidy and F.A.R bonus

New York is one of the city which used this FAR incentive approaches effectively to increase the efficient urban growth through property and land taxes. Using this FAR incentive approaches for generating revenue for municipal services and infrastructure became an efficient method to manage the urban growth. Infrastructure became a significant tool in this approach which enable cities to become more sustainable, pedestrian friendly neighbour hood. Meanwhile it improves the public infrastructure facilities in the cities and also generates the revenue. FAR has a major impact on land price fluctuation which directly related to the housing supply especially for Low Income and Economically weaker Section housing in expensive localities of the city areas. Hence, it is necessary to assess the variable FAR as tool to make provisions for Inclusionary Housing.

9

1.4

“To develop Inclusionary Housing mo

OBJECTIVES

METHODO

Stage 1

To understand the relationship between F.A.R and formal housing provision

Stage 2

To study the impacts of low F.A.R on housing market in Chennai and demand for Inclusionary Housing

Stage 3

Literature study a

To identify the affordability gap in formal sector housing developed within permissible FAR limits, for various income categories

• • • • •

Urbanization, housing shortage, Informal an Recent news articles and journals to understa Housing policies, schemes, Affordability ratio Land cost to F.A.R,Inclusionary housing and C Housing development models by public secto

Analy • Permissible F.A.R • Annual population growth rate • Property price escalation • Housing schemes • • • •

Selection o dential par developing

Private developmen Government develo PPP in redevlopmen Self Financing Sche

Stage 4

• Market price of housing • Affordability Gap To suggest alternative scenarios of FAR and ground coverage for enabling Cross- subsidy and making housing units affordable for all income categories

Saleable cost o Inclusionary Housing (IH) models 10 10

• • • •

Private hous Governmen Housing dev Self-Finance

AIM

odels using variable FAR as a tool”

Methodology

Scope, Outcome and limitation

Data required

ysis

of resircels for g models

Distribution of HHs based on income categories in the selected wards Land cost and non land cost for various locations

nt on Private land opement on Government Land nt eme • Cross-Subsidy • Land cost to FAR

of the housing units

sing development nt housing development velopment through PPP e Scheme

Building works • Water supply installations • Sanitary installations • Electricity installations Infrastructural work • Cost for water supply network • Cost for Sewerage and SWM • Cost for roads and street lighting • Cost for landscaping • Construction cost Land price Ground coverage and number of floors 11 11

Selection of land parcels

Aim and objective

Developing of models

nd formal housing market and the present scenario o to income group Cross-subsidies or or government

Proposal

Background study Problem identification

and Case Study

Literature and case study

OLOGY

12

02

LITERATURE STUDY AND CASE STUDY 13

2.1

Role of FAR in urbanization

Indian cities facing tremendous strain due to population growth. The growth of population in urban areas is up to 3% per annum as per National Statistical Survey report, 2007. Population growth became the major reason for increasing the housing supply in major cities of India.

Meanwhile, the existing supply does not cater the growing demand. According to 2011 census the country has witnessed 377.10 million urban population which is 31.16% out of total population in the country along with 78.86 million housing stock(Ministry of Housing & Urban Poverty Alleviation Government of India, 2012).

The rising concentration of population living in urban areas had already created the problems such as lack of affordable housing supply, land shortage water, open space and power demand which were severely stressed. The actual issue behind the housing stock and household gap is obsolescence, congestion and dilapidated situation. This became difficult for people to reach the formal housing market which led them to live in deteriorated, squatter and slum housing, especially for people belongs to Economically Weaker Section. Floor area ratio (FAR) defined as the ratio of total built-up area on a plot to the area of that plot in cities in India is maintained at a low level due to the rationale that existing infrastructure in these cities cannot support additional development or increases in population.

Most cities in India have a blanket FAR with slight variances across the city that limit the opportunity to leverage infrastructure nodes and networks for high-density development. Additionally, although the primary opposition to increasing FAR in India stems from urban infrastructure constraints, removing FAR restrictions is imperative to procure investments for upgrading urban infrastructure and services. Poor and middle-class households have been priced out from urban centres and commuting costs for workers have increased (World Bank 2013). The Ministry of Urban Development (MoUD) launched the Smart Cities Mission in June 2015, with an outlay of $7.5 billion. The mission guidelines recommend the use of high FAR, with FAR bonuses to stimulate urban redevelopment in the cities.

14

Literature study

Graph 3: Maximum permissible F.A.R in world cities Source: Lainton 2011, cited by World Bank Paper on Urbanisation beyond Municipal Boundaries

2.2

Restricted FAR as reasons for low reach of formal market

FAR is a major factor that determines the height restrictions of the building and also the additional restrictions are The city of Mumbai which has lowest FAR of 1.33 has the highest property prices in the world(No, 2016). This lowers the land supply and led cities to expand horizontally and make property prices to rise beyond reasonable level. Horizontally expanded city increases the commuting cost of the residents.

So people prefer to live in near the core areas even in congested surroundings. Despite of low FAR the population density does not reduce, because the cities are already congested and violated the maximum permissible FARs. Hence increasing

15

2.3

Scarcity of marketable land parcels

Large tracts of centrally located urban land are owned by public entities such as railways, ports and defense authorities. These are non-marketable pockets, and lend themselves to the proliferation of slums and squatter settlements as the authorities are often unable to monitor their holdings. Scattered and poorly planned settlements make it further difficult to provide land for mass housing. Property buyers take many factors other than project quality and cost, such as basic utilities, connectivity, and infrastructure and so on. Thus affordable housing demands adequate supply of well-serviced land and this in turn influences prices and willingness

2.3.1 Rising Costs Both land and construction costs have increased, compounded by price appreciation of construction materials and labour. Financing affordable housing is constrained because of different construction indices and incomes across the country. Government of India has formulated many policies to make housing affordable all income categories. Jawaharlal Nehru National Urban Renewal Mission (JNNURM), Basic Services for the Urban Poor (BSUP), Affordable Housing in Partnership (AHP), Rajiv Awas Yojana (RAY) etc.

2.4

Type of housing market

Housing market in India is classified into types which is informal and formal housing market. The market which strictly meets the certain criteria of the government is termed as Formal Housing market. Many of the markets violates these criteria and became unviability and inflexibility for formal housing provision. On the other hand the informal housing market perhaps does not meet the basic necessities for housing development. The people who cannot afford housing units in a formal market tend to search for dwelling units through informal market which became cheaper for their budget. Also, it some cases these kind of settlements became the major reasons for slums, squatters, chawls and other illegal settlements sin the urban areas especially in large metropolitan cities.

16

Image used for representational purpose

17

2.5

Locational value of housing

Urbanization alone does not create the housing shortage issue which major includes the location of the housing development. The metropolitan areas attracts people from various neighbourhoods for employment and other economic activities. This rises the demand for developable urban land for residential land use in the core areas of the city and also it made the urban land became very scarce which led to increase the cost of urban land parcels. Inefficient management of urban land for residential development makes formal market unreachable for the low income people. Therefore the cost of the same size housing units vary based on the location (Sarkar, Dhavalikar, Agrawal, & Morris, 2016). This made them to purchase a house in informal market which has severe stress in basic amenities such water supply, roads, open space, sewerage and transportation. Thus the value of housing units vary based on location. Hence increasing the FAR does not create the stress on the urban systems instead it will increase the housing supply in the formal market by reducing the land cost and housing cost. So the FAR does not have significant impact on density(No, 2016). Housing demand estimation is depends upon the property price to income category. Although the income distribution category vary across regions. Government policies are indirectly responsible for housing cost which has created major impacts on housing supply.

2.6

Cost of constructed space as per FAR

Incentive and disincentive based approach is used in US to regulate the urban growth.

It focused on Development impact fee, redevelopment incentives, split-rate property tax, brownfield development incentives, historic rehabilitation tax credits and location efficient mortages. Higher tax were formulated for the developments inside the city areas and more incentives were provided for the city periphery areas to induce the development. The incentives and disincentives were based on the uses of the zoning areas. Through the higher incentives the desired development is achieved along with tax reductions and exemptions (Bengston, Fletcher, & Nelson, 2004). Also the incentive programs reduced the tax reduced the tax for land-intensive uses and it increased the tax for land-extensive uses such as parking lots etc. The individual techniques has to coordinated with and interlinked together to achieve the purpose of the new techniques. The priority funding areas are identified and programs related to brownfield development and open space protection also considered. The new actions advised to include in relevant polices and many level of government agencies are integrated to achieve efficient urban development. Coordination of vertical and horizontal levels between governments and other stakeholders is necessary. (Kim & Gallent, 1998) 18

Literature study

Seoul has formulated five tier zoning system to regulate the urban growth including the promotion zone, re-arrangement zone, Inducement zone, reservation zone and preservation zoneThe City Planning Commission has been instrumental in significantly improving the urban realm in the city by providing incentives to improve and maintain public spaces, and formulating strict urban design guidelines to regulate overall urban form. An incentive to promote the establishment and retention of neighbourhood grocery stores and affordable housing (the Inclusionary Housing Program). The City Planning Commission (CPC) designated special zoning districts in the city to achieve specific planning and urban design objectives in demarcated areas with unique characteristics.

Graph 4: FAR and Cost of Land Source: Land Markets, Government Interventions, and Housing Affordability. Alain Bertaud, 2010.

2.7

Inclusionary Housing

Inclusionary Housing (IH) is a way forward approach for providing Affordable Housing for all income categories through cross-subsidization by increasing the FAR. Inclusionary housing policies can create affordable units without decreasing development or increasing prices. It is necessary to embrace initiatives that promote the provision of housing for the low and middle income populations through planning policy and practice. Inclusionary housing is a planning policy to provide affordable housing for low-income people in cities. Inclusionary zoning emerged in the USA during the 1970s

19

The mechanism is currently widely implemented in the USA where it fit into a variety of state or provincial legal and regulatory schemes. It is also extensively applied in Canada, UK, Ireland, Netherlands, France, Italy, Spain, India, South Africa, Israel, New Zealand, Australia, and other countries (Schwartz et al. 2012; Calavita & Mallach 2010). Land use regulations can mandate the developers of marketrate residential development to set aside a small portion of their units (usually between 10 and 20 percent) for those households who are unable to afford housing in the open market. The developers can choose to pay a fee or donate land in lieu of providing units (Calavita & Mallach 2010). It can be mandatory or voluntary for new housing. These programmes usually offer the developers incentives such as density bonuses, relaxation of development regulations, or a reduction or waiver of fees,

Program structure

Mandatory IH programs, Voluntary IH programs Fee based programs: Residential linkage/ Impact fee and Commercial Linkage fee

Requirements

Set Aside Percentage, Income Targeting, Standards and Preserving Affordability

Applicability

Geographic Targeting, Project Size Threshold, Tenure Type and Other Exemptions

Alternatives

Onside Performance, Offsite Performance, Land dedication and Preservation projects

Incentives

Design

Density Bonus, Parking reductions, Zoning variances, Expedited Processing, Tax Abatement, Fee reductions/Waivers and Housing Subsidies

20

Literature study

and fast-tracking permits (Schwartz et al. 2012; Meda2010). Inclusionary housing is aimed at increasing affordability and encouraging social inclusion in communities.

Inclusionary housing is aimed at increasing affordability and encouraging social inclusion in communities. Inclusionary housing generates affordable housing for the low and middle income bracket. Inclusionary zoning is intended to reduce economic segregation by mandating that people with a mixture of incomes reside in a housing area. Low income groups live within the neighbourhood of those in a higher economic group. Moreover, this housing policy reduces the concentration of poverty in slum areas. Thus, it increases housing accessibility for those with low-income.

Homeownership is also a critical part of the housing stock and can be a stable and affordable option when the mortgage terms and home price are within reach of a family’s budget. For many working families, homeownership represents the American Dream. Aside from comprising their largest financial asset, homeownership provides security from unwanted moves and control over features of their home. Some studies have shown that homeownership is beneficial for children- they are more likely to do well in school, less likely to have behavior problems and less likely to become pregnant as teenagers. From a community’s perspective, homeowners may provide stability to their neighborhoods in which they are invested.

Inclusionary Housing Bonus Either floor area transfer from High Line Transfer Corridor or IH Floor area transfer from High Line Transfer Corridor Base Floor Area Ratio

Figure1: Modified Inclusionary Housing Program Source: 2016 INCLUSIONARY HOUSING - Advocate for Alternative Options

21

2.8

Inclusionary Housing in United States

Inclusionary zoning (IZ) is an affordable housing tool that links the production of affordable housing to the production of market-rate housing. IZ policies either require or encourage new residential developments to make a certain percentage of the housing units affordable to low- or moderate-income residents(Thaden & Ruoniu Wang, 2016).

In exchange, many IZ programs provide cost offsets to developers, such as density bonuses that allow the developer to build more units than conventional zoning would allow, or fast-track permitting that allows developers to build more quickly.

Anticipating a less affordable future, Philadelphia is considering requiring developers of residential projects of 10 units or more to set aside 10 percent of units at rents or purchase prices below market rate. New Orleans has a similar voluntary program right now and it could become permanent. In Boston, developers can pay into an affordable housing fund to get zoning clearance to build bigger. Such programs and policies, referred to as inclusionary housing or inclusionary zoning, are being used across the United States.

Graph 5: Number of Inclusionary Housing Programs by the Incentive to developers Source: Inclusionary Housing in the United States: Prevalence, Impact, and Practices by Emily Thaden, Ruoniu Wang 22

Case study

Budget cuts have led to sharp reductions in many federal affordable housing programs, particularly programs that subsidize the production of new affordable housing properties. The Federal HOME program budget, for example, fell by 62 percent between 2005 and 2015. In most cities, inclusionary housing is just one tool in a suite of local policies intended to address the affordable housing challenge. A study of 13 large cities showed that nearly all of those with inclusionary programs also manage the investment of federal housing funds and issue tax-exempt bonds to finance affordable housing. Most also used local tax resources to finance a housing trust fund, and many had supported land banks and community land trusts as well.

About half of those cities took advantage of tax increment financing, and a growing minority established tax abatement programs that exempt affordable housing projects from property taxes. While the exact mix of programs differed from one city to the next, every city employed multiple strategies.Communities that want to make a real difference in the supply of affordable housing must pursue multiple local strategies. Inclusionary housing is often implemented alongside one or more of these local strategies.

Map 1: Inclusioanry Zoning laws by state Source: Inclusionary Housing, Grounded Solutions Netwrok 23

2.9

Inclusionary Housing in Australia

Inclusionary Zoning is defined as, “a land use planning intervention by government that either mandates or creates incentives so that a proportion of a residential development includes a number of affordable housing dwellings� (Australian Housing and Urban Research Institute, 2017). Projects are concerned with inclusionary zoning and the role it may play to provide for, subsidise or complement the development of social and affordable housing.

There are two main approaches to building affordable housing through the planning process. The first is the mandatory model which requires that a number of affordable homes are included in developments as a condition of planning approval. The number of potential affordable homes developers are obliged to build is determined by either negotiated agreements made between a developer and planning authority during the planning assessment process, or fixed requirements specified as a proportion of housing or development value.

The second approach is the voluntary incentive model, where new affordable housing is encouraged by reducing costs for developers. Types of incentives include: Modifying planning standards based on performance criteria for example, increasing site yield to encourage low cost housing like boarding houses, student accommodation, and retirement villages in designated areas. Bonus systems which relax specified development controls, typically height, density, setback or parking controls, in exchange for constructing dedicated affordable housing. Planning process incentives where projects that include affordable housing attract special treatment in the planning process such as fast track approvals, reduction, exemption, or refund of application fees, infrastructure charges or rates.

The Housing Plan for South Australia, introduced in 2005, mandates that 15 per cent of new dwellings in all significant development projects be affordable, including at least 5 per cent for high-needs groups. Initially, the affordable housing requirement was applied to government land releases on the urban fringe; however, the policy is now being applied to urban renewal sites. At 30 June 2014, the South Australia Inclusionary Zoning scheme had delivered 1,489 affordable homes, with a further 3,300 committed. Currently the City of Sydney has mandated an affordable housing component (of around 2%) in specified zones such as Ultimo/Pyrmont. In these areas, developers either include affordable housing within developments or pay an affordable housing levy. Inclusionary zoning is anticipated to deliver 330 affordable units in the Green Square redevelopment area of central Sydney. sys 24

Case study

South Australia

15 %

New South wales

2%

Australian Capital Territory

20 %

5% Figure 2: A policy brief by AHURI and snapshot of the most significant inclusionary zoning programs Source: Australian Housing and Urban Research Institute The ACT Government introduced its Affordable Housing Action Plan in April 2007.

While not strictly an Inclusionary zoning scheme, it does require that at least 20 per cent of all new estates include affordable housing, implemented programs to support affordable house and land packages, and introduced a land rent scheme to reduce upfront costs for purchasers.

2.10

Inclusionary Houaing in Dhaka, Bangladesh

An enabling environment for inclusionary housing can reduce its constraints and can increase housing affordability and housing inclusion through: the revision of housing policy, the legal and institutional frameworks, the financial mechanisms, and the knowledge base. That momentum might be given to the provision of inclusionary housing in Dhaka by a combination of the following proposals(Nahrin, 2018). The success of inclusionary housing depends on its coordination with national, regional and local urban planning policies, and plans for housing (Meda 2010). Cross-subsidies can be an alternative potential option for cost recovery in inclusionary housing projects (Schwartz et al. 2012; Meda 2010) in Dhaka. The government could fix slightly higher prices from the high income bracket as well as commercial and industrial areas.

25

2.11

Charkop, Mumbai

Charkop were two of the 13 sites chosen for development. Together their area was 147 ha (21% out of a total of 702 ha) and they would accommodate 25,150 hh (25% out of a total of 1, 00,000 hh), making these at 171 hh/ha of gross area (including roads and amenities) the densest of all the schemes in the project(Patel, 2015). Constructing for a mix of income groups, with the higher-income groups in effect subsidising land costs for the lower-income groups, but with everyone paying for their own construction costs Option 1: Accommodate them at the same density as the sites and services 388 hh, that is, 273 hh/ha. We will need 2.08 ha to do this. If we work out the details, adhering to norms of front, rear and side open spaces on each plot as required by the National Building Code, we find we can accommodate them in G+5 buildings, on 18 plots each measuring 30 m frontage x 40 m deep. The floor space index (FSI) is 1.88. The total land area for the entire development is then 5.65 ha (2.15+1.42+2.08).

Option 2: Or we can accommodate the 529 higher-income households on the same size plot, 1.42 ha, as the sites-and-services. Now we find we need G+8 buildings, on 6 plots, each measuring 45 m frontage x 55 m deep. The FSI is 2.76. The total land area for the entire development would now be 4.99 ha (2.15+1.42+1.42).

Figure 3: Charkop site and services scheme site Source: Affordable Housing with Spatial Justice, For All by Shirish Patel

26

Case study

2.12

Ahmedabad

Problem of affordable housing was a seemingly a government priority as evident in the rhetoric of many programmes of housing for the poor, the so called LIG housing areas in the master plans of many large and medium sized cities. LIG housing has absorbed significant public resources, but has thus far proved to be quite inadequate to address the problem of affordable housing(Sarkar, Dhavalikar, Agrawal, & Morris, 2016). A few interesting developments of using private firms to build houses for the poor which the government then allocates have a better record in terms of quality and occupancy such as by the AP Housing Board have not been followed on the scale and quantum required to overcome the problem. The Government of India’s programmes for affordable housing in India, namely the Rajiv Awas Yojana and Housing for All 2022, and bring out the core finding that in ignoring the structural limitations that arise out of the assumptions of urban planning, transport and infrastructure design in towns and cities, severe distortions with regard to land use and allocation in the country, besides the limitations in the design of these specific policies, the effectiveness in enhancing affordability has been very limited.

2.13

Housing development models of Rajasthan

Affordable Housing Initiatives by Department of Urban Development and Housing & Local Self Government, Government of Rajasthan made following objectives to fulfil the need of Affordable Housing.

Objectives: • To reduce the housing shortage in the State, especially in EWS/LIG categories.

To take up large scale construction of Affordable Housing (with focus on Economically Weaker Section & Low Income Group) • To bring down the cost of EWS & LIG categories of houses to affordable limits.

To promote investments in housing in urban sector through Public Private • Partnership (PPP) Model.

• To involve private developers in the construction of EWS/LIG categories of houses by offering various attractive incentives.

• To create Rental Housing as transit accommodation for migrants to urban areas

27

Model 1: Private Developers on Government Land (for rental housing or outright sale basis) Private Developers on Government Land (for rental housing or outright sale basis) • The ULBs to offer Government Land for construction of EWS/LIG flats through open bidding process.

• Land is offered free of cost but the bidding parameter is the maximum number of flats offered by the bidder • The developer offering the maximum Flats is awarded the project.

Model 2: Private Developers on Private Land

Various models

• Selected developers to take up construction of EWS/LIG/MIG-A flats (G+2/G+3 format) on minimum 40% of the total land for EWS/LIG & 12% for MIG-A. • Built up EWS/LIG/MIG-A flats to be handed over to the nodal agency (Rajasthan Avas Vikas & Infrastructure Limited) at pre-determined prices, to be allotted to the eligible beneficiaries.

• Developer free to construct MIG-B/HIG flats on remaining land.

• Several incentives offered to developers.

28

Case study

Model 3: Mandatory Provisions • Schemes of Rajasthan Housing Board – Minimum 50% plots / houses / flats of EWS / LIG category & 20% of the plots/ houses / flats in MIG-A category.

• Schemes of Urban Local Bodies – Minimum 25% plots / houses / flats of EWS / LIG & 20% of the plots/ houses / flats in MIG-A category.

• Schemes of Private developers- 15% of no of plots in case of a township & 5% of the FAR in case of group housing for EWS / LIG. • Incentive of 0.50 Additional FAR for EWS / LIG housing • Split locations is allowed with proportionate increase in number of houses flats in ratio of DLC rates of the two areas to max. 3 times.

• Developers reluctant to build EWS/LIG flats in core area schemes and split location resulting in more numbers of flats for EWS / LIG categories

Model 4: Private Developers on Land Under Acquisition • ULBs to identify private lands for acquisition and set apart for construction of houses to the developer cost of acquisition +10% shall be payable by the se-lected developer • Land owners whose lands already under acquisition for residential schemes of Development Authorities / Urban Improvement Trusts /Urban Local Bodies. May be used for creation of stock under Affordable Housing Policy like in Model No.2.

• 52% of the land will be used for EWS/LIG/ MIG-A as per Model No: 2 of the policy remaining 48% land allowed to be used for HIG and other category of flats.

29

2.14

Research questions

1) What will happen if an inclusionary housing is coupled with F.A.R bonus?

2) What happens to urban land value if the F.A.R is raised for a residential property?

3) What happens to affordability cost for various income category if the land price changes?

4) What happens to home prices for various income categories in various urban locality in an inclusionary housing model?

30

Basic IH model

2.15

Inclusionary Housing model

Land cost, Construction & Infrastructure cost (based on local prices) Stamp duty, Registration fee and Developers profit are used to calculate the housing cost

The cost of the housing units has to be reduced if the estimated housing price is higher than the affordable cost

â‚š

Estimated market price

Affordability Gap

â‚š

High end properties could be taxed to cross subsidise the low -income units. Further the cost of land would be reduced by increasing the F.A.R

Cross-Subsidy

F.A.R cost of land

Affordability cost Additional subsidies are given by the government for registration fee and stamp duty (mostly to EWS and LIG) if necessary

Finally, the unit cost is reduced to achieve the affordability level of housing units in the particular neighbourhoods

Saleable cost

31

32

03

STUDY AREA PROFILE: CHENNAI, TAMIL NADU 33

Image used for representational purpose

CHENNAI, TAMIL NADU Chennai was earlier known as Madarasapattinam or Madras which also referred to as “Gateway of South India”. It is a capital city of one among the most urbanized Indian state of Tamil Nadu. According to census 2011, it is the sixth most populous metropolitan region in India which accommodates approximately 8.9million people. Chennai is bounded by the Longitudes of 80o 12’10” and 80o 18’20” and latitudes of 12o 18’20” and 13o 08’50”. The city’s economy is supported by various sectors such as a computer, technology healthcare, hardware manufacturing, and automobile industries. Moreover, it is nicknamed as “Detroit of India” which comprises countries major part of automobile industries. Kovam river and Adyar river, the major rivers of the city is massively polluted by industrial effluents 34

and domestic waste. Buckingham Canal runs parallelly to the coastline for 4km and the western region contains the several lakes. The city region shows a moderate risk during earthquakes and classified as Seismic Zone III. The city is expanding towards Koyambedu, Sriperumbdur, and Ambattur in west and OMR and GST roads in the South. West and South Chennai comprise mostly residential, along with commercial centers, IT firms, and other companies. Greater Chennai Corporation (GCC) governs the city. The intercity bus service is provided by Metropolitan Transport Corporation (MTC) on 729 routes. Chennai Metropolitan Board(CMWSSB) manages the water supply and Sewage treatment. The city is served by two primary water reservoirs namely Chembarambakkam Lake and Red Hills Lake. The chennia has divide into three parts namely South Chennai, Central Chennai and North Chennai.

35

Study area profile: Chennai

3.1

Greater Chennai Corporation (GCC)

Greater Chennai Corporation is established in 1688 which is India’s oldest and the world’s second oldest corporation. In 2011, the corporation jurisdiction area was expanded to 426 Sqkm from 174 sqkm with which is three regions namely Central, North and South Chennai which also includes the part of neighbourhood districts of Kanchipuram and Thiruvallur. It comprises 15 zones further subdivided into 200 wards. According to the results of census 2011, the total population of the corporation is 4646732.

The sex ratio in the city is estimated 989 females for every 1000 males which is higher than the national average ratio of 929. The estimated death rate is 160 and birth rate is 400. The city has the literacy rate of 81.27% which is much above than national average of 72.99%. Tamil Nadu Slum Clearance Board (TNSCB) predicted that 72827 families of Economically Weaker Section (EWS) living in undeveloped slum areas, mostly these settlements are found near the major two rivers (Cooum and Adyar) of the city.

The GCC provides services such maintenance of roads and canals with the municipal boundary, formation of storm water drains, bus routes, roads, parks, community centre, traffic islands, schools and health services. The land surface area of Chennai is plain terrain and flat terrain. The contours from above the mean sea level ranges from 2 meter to 10 meter. Chennai has 72.81 km of tree cover, 35.72 km of water bodies and 241.5 km of buildings.

The average rainfall is recorded about 1300 mm in the city region. The city experiences the temperature of 20oC to 24oC during the months of winter and during the months of summer it recorded the highest temperature of 45oC. Table 1: Land usage pattern in Chennai Name

Area in Sq km

Percentage

Buildings

241.50

56.7

Parks

9.20

2.2

Tanks

35.72

8.9

Temples

0.84

0.2

Trees

72.81

17.1

Others

65.93

15.5

Total

426.00

100.0

Source: GCC Disaster Management Plan, 2017 36

Map 2: Population density Source: Data from Census of India, 2011 and map generated by author 37

Study area profile: Chennai

3.2

Population density

The density of the population is very high in old city areas which results maximum of 1330 persons per hectare. High density areas are mostly located in the Central Chennai and South Chennai. The wards within 5km from the CBD has the maximum density.

The South Chennai results fastest growth as compared to North Chennai. Upcoming Information Technology center and education institutions are two major reasons for attracting the population towards the South Chennai. The North Chennai area mostly contains the industrial activities became less attractive zone for residential development.

Areas in the North Chennai such as Egmore and its neighborhood highly influenced by port activities. Maximum of the wards has density between 300 to 500 persons per hectare. The second maximum is 100 to 300 persons per hectare.

The lowest population density of up to 14 persons per hectare lies in the periphery wards which is added recently in 2011 to Greater Chennai Corporation (GCC). Population density of GCC is shown in the map 3 according to census 2011.

The population residing within the GCC boundary is divided into six zones from the CBD based on the distance with 5km interval. The population from the first ring is shifted to the next two rings which lies within 15kms from CBD were the population in the distance of 5km to 10km is increased upto 43.5% which is highest during 2011. The third ring also results in increased population percentage of 27% which was the second highest in 2011. The population from in the distance of 15 km to 25km also shifted to second and third ring.

The area lies within the distance of 5km to 15km from CBD resulted highest increase in population over years. Like other large India cities, Chennai is growing fast economically and demographically. The economy of Chennai grew by 13% per year on an annual compound average basis between 1990-1 and 2002-3. Population growth in Chennai and other large Indian cities has also increased rapidly. Between 1981 and 2006, the population of Chennai grew by 2.3% per annum. While this figure is robust, it is less than the overall growth rates for Indian cities (2.99%)(Dowall & Monkkonen, 2007).

Table 2: Population of Greater Chennai Corporation from 1991 to 2011 Year

Name of the Area corporation (sq.km)

Persons

Density sq.km

1991

Chennai

174

3841396

22076

12.6

2001

Chennai

174

4343645

24963

13.07

2011

Chennai

426

4646732

26553

6.5

Source: Census of India, 1991, 2001, 2011

38

per Increase in population since 1981 in %

Map 3: GCC population 1991 Source: Data from Census of India and map generated by author 39

Study area profile: Chennai

3.3

Permissible FAR for residential buildings

The development authority has introduced the Tamil Nadu combined development and building rules, 2019 for throughout the state. Tamil Nadu government has passed a GO for new FAR regulations which came to act from October 2018. The FAR for ordinary building in the primary residential zone is increased from 1.5 to 2. For high rise buildings. the FAR in the city is uniform based on the road width which is showed in table. The premium for non-high rise buildings is increased upto 40% and for high rise buildings it is increased upto 50%. For example if a highrise building has 18 m road width it can build maximum upto 3.25 FAR. Progressive increase in real estate market value of the city. The development with 2.5 FAR gets premium of 40% and the redevelopment projects gets the premium of 50% for 2.5 FAR. The entire city has uniform FAR of 2 for residential buildings which was earlier 1.5.

Chennai Development Metropolitan Authority has proposed a second Master plan for the city for 2026. The second master plan focuses on various features for the city development within the development boundary. One of the most important salient feature of the second master plan is increasing population density to 330 persons per hectare.

But presently old areas in the core city has experiencing very high FAR where the FAR has already increased more than 2.5 for residential dwelling which has less than 12m as against the proposed FAR. Area in the old city such as Puraisaivakkam, George Town and Triplicane has reached the population density of more than 1000 people per hectare. The development for this highly congested areas becomes a major challenge for the development authority.

Chennai Development Metropolitan Authority has proposed a second Master plan for the city for 2026. The second master plan focuses on various features for the city development within the development boundary. One of the most important salient feature of the second master plan is increasing population density to 330 persons per hectare. But presently old areas in the core city has experiencing very high FAR where the FAR has already increased more than 2.5 for residential dwelling which has less than 12m as against the proposed FAR. Area in the old city such as Puraisaivakkam, George Town and Triplicane has reached the population density of more than 1000 people per hectare. The development for this Table 3: Permissible FAR Min. Road width

upto 12m

15m

18m

Maximum FAR

2

2.5

3.25

Source: Tamil Nadu combined development and building rules, 2019 40

Map 4: GCC population 2001 Source: Data from Census of India and map generated by author 41

Study area profile: Chennai

3.4

Spatial distribution of population in GCC

3.4.1 GCC population in 1991 In 1991, the present area of GCC was a part of Kancheepuram and Thiruvallur district. The population data for wards in Kancheepuram and Thiruvallur has taken from census 1991 which was later included in GCC.. The maximum population is recorded 57163 persons. The highest population is seen in the wards lies within Chennai city boundary. The wards in Kancheepuram and Thrivallur districts results in low population due to lack of municipal services.

3.4.2 GCC population in 2001 In 2001, the boundaries of the Chennai Corporation also had a few wards from Kancheepuram and Thrivallur district. In particular in Central Chennai, which covers Ambattur and Anna Nagar, the new wards rise in population growth.

In the areas where municipal services are already available, the population flourished mostly. The maximum population is recorded 62394 persons.

3.4.3 GCC population in 2011 The maximum population range of the GCC in 2011 remains in sixty thousand. The population in core area of the city has shown negative growth. Because the population growth is shifted beyond 5 kms to 15 kms from the core area of the city region. The new ward which had been included in GCC showed the positive growth in population.

Graph 6: Spatial distribution of population in Chennai from 1981 to 2011 Source: Census of India 42

Map 5: GCC population 2011 Source: Data from Census of India and map generated by author 43

Study area profile: Chennai

3.5

Population Growth Rate from 1991 to 2001

The growth of population happened due to the labour force migration, IT sectors and other industrial and educational development. The percentage of population growth rate is shown in map 7 and map 8. West and South Chennai resulted in highest population during both decades. The core area of the city shown negative population growth due to scarce urban land and high cost of properties. Suburban region of the Chennai has attracted many developers after included in GCC. The property prices are significantly low as compared to the city core which lies within 5km surrounding from the Central Railway Station.

3.6

Population Growth Rate from 2001 to 2011

Continuously, the population was increasing in the suburban areas from 1991 to 2011.

Even though the population in the wards under Chennai districts shows highest in numbers. In October 2011, few more wards from the neighbourhood districts were added into the corporation. This new wards already shown positive population growth in the past decades and all these wards are already included in the Chennai Metropolitan Development Authority boundary. The extension of metro services and other real estate developments in this periphery region became the major reason for the continuous population growth. North Chennai had less and negative population growth because these areas were denoted for industrial and port activities.

In many ways, Chennai, like Mumbai, Delhi and Bangalore, is a globalization hotspot.

It is a magnet for considerable foreign direct investment and economic transformation. However, in addition to global forces, the metropolitan restructuring of Chennai and other Indian cities also depends on local agency in managing growth (Shaw and Satish,2006). In return, the manner in which Indian cities accommodate new businesses and migrants, while trying to improve environmental quality and housing affordability, will determine their future regional competitiveness. Those that fail to manage urban growth as well as foreign investment will see congestion, land and real estate inflation, and declining urban service quality, factors that will reduce urban productivity.

Most large cities in India have had very restrictive land use policies and regulations, including the urban land ceiling act, rent control, uniform low floor space index (FSI), public sector dominance of the real estate market and inadequate provision of urban infrastructure (CMDA 2004). Chennai is somewhat different because it has partially liberalized its land policy and it recognizes the role of the private sector in housing and real estate development. At the same time it still has rent control and a very 44

Map 6: GCC population from 1991 to 2001 Source: Data from Census of India and map generated by author 45

Study area profile: Chennai

low FSI (1:1.5). These regulations, combined with inadequate infrastructure service coverage, are especially problematic in the area outside the central 10 km of the CMA (Dahiya 2003), and might be a cause of the unusual density trends of the city.

The decentralization of a city’s population is often associated with a decrease in overall population density, and a decrease in population density in the central areas of the city However, in the case of Chennai, the population has grown in the areas farther from the center, but the overall gross density has increased. The average gross den-

3.7

Residential property and land price escalation

Peri- Urban area land is most preferred due to the high availability of vacant land less price as compared to the core areas. These areas are added to Municipal Corporation on 2011. Areas such Porur, Medavakkam, Perumbakkam, Tambaram and, Avadi recorded in high demand. The most preferred property type is apartment followed by plots. MIG housing demand is very high, the price range between Rs.40- 80 lakhs. It shows that 2BHK is most preferred followed by 3BHk. The residential parcels within the 5km from the central railway station which includes Purasaivakkam, Triplicane and George Town has become very scarce. This is due to the poor infrastructure facilities in the old areas and lack of residential land parcels along with low FAR which restricted the built up area for the upcoming demand. The demand has shifted to next 5kms which lies between 5km to 10km from the city core. Land area in this areas has very high price as compared to the core area. Gradually the land price reduces from the city core to the periphery.

In addition to the distance of land from the center of the city, the potential to develop land is an important factor in determining its price. Generally, in the developing world,

22% 34%

10%

51%

68%

Plots

Villas

2% 3% 10%

South

Apartments

Graph 7: Preferred property type

North

West

East

Others

Graph 8: Preferred location

Source: 99 acres.com

Source: 99 acres.com 46

Map 7: GCC population from 2001 to 2011 Source: Data from Census of India and map generated by author 47

Study area profile: Chennai

the potential for development of a piece of land is indicated by its having a clear property title and whether it is connected to infrastructure. In the case of Chennai, approval for development and connection to infrastructure seem to be almost inseparable, indicated by the minimal variation in price between lots that have received development approval, infrastructure or both. There is also a very large premium on having development approval, infrastructure or both versus not having any formal recognition of development potential. This is likely due to tendencies in the consolidation of irregular housing. Once a neighborhood is able to obtain either approval for development, it becomes much easier to get infrastructure installed, and vice versa. The premium on land with development approval and infrastructure is different for land sold in parcels.

3.8

Housing development in Chennai

Tamil Nadu Housing Board (TNHB) fulfills the demands of various income category people such as Economically Weaker Section (EWS), Lower Income Group (LIG), Middle Income Group (MIG) and Higher Income Group (HIG). It provides housing plots, flats and also dwelling units in satellite towns in various part of the city. Affordability for the buyer is achieved through various schemes and low interest loans from nationalised banks. Loan payable period for the flats are 8 years and for houses are 10 to 15 years. Houses under Self-Financing Scheme (SFS) gets payable period of 12 to 18 months depends upon their income and type of loan. All this house developments are provided with adequate physical and social infrastructure facilities. Tamil Nadu Government Servants Rental Housing Scheme (TNGSRHS) allots houses for government employee(Nadu, Board, Nadu, & Nadu, n.d.).

3.9

Income eligibility

The Tamil Nadu government has declared people earning less than Rs.12000 per month under the EWS category and people earning Rs.12000 to Rs.18000 per month under LIG category which is higher than the national income criteria level. Most of the EWS houses in the city is provided by the TNSHB but some EWS tenements got allotted their dwelling units under TNHB. Table 4: Eligible income criteria for allotment Category BUA per unit(sqm) Monthly income in Rs

Annual income in Rs

E.W.S.

28

Upto Rs.12, 000/- per month.

< 144000

L.I.G

42

Rs. 12,001/- to Rs. 18,000/- per month

144012-216000

M.I.G.

65

Rs. 18,001/- to Rs. 37,000/- per month

216012-444000

H.I.G.

84

Rs. 37,001/- to Rs. 62,000/- per month

444012- 744000

Source: Tamil Nadu Housing Board (TNHB) 48

Map 8: Residential property price escalation from 2014 to 2016 Source: Data from TN registration department and 99 acres.com and map generated by author 49

Study area profile: Chennai

The graph shows the relationship between income and affordability for various income groups for purchasing a new house and residential plot. Thus the higher income level groups can better afford to purchase a new house as compared to low income groups.

3.10

Role of Private Sector in housing market

Chennai is one of the fastest growing city in the world and also a highly populated urban area. Rapid urbanization, migration towards urban areas due to employment opportunities and industrial development increased the housing and infrastructure demand. During the 1960s and 1970s Indian households were provided with very less financial support which has been gradually increased and made people to access loan for construction of houses in next 20 years.

With this background, role of Private sector in housing has started in a big way. In the beginning, small scale builders served for the need for small group of buyers in 1970s and 1980s. The large scale housing development started emerging for next 20 years along with tax incentives to the buyers. Large scale housing development were provided by the private developers due to the buyerâ&#x20AC;&#x2122;s good housing demand (Ramanathan, n.d.).

4000000

3500000 4000000 3500000 3000000 3000000

2500000 2976000

2500000

2000000

2976000

2000000

1500000 1500000

1776000

1776000

1000000 1000000 500000 500000 00

576000 576000 144000

144000

864000 864000 216000 216000

444000 444000

744000 744000

144000 144012-216000 216012-444000 444012-744000 144000 144012-216000 216012-444000 444012-744000 Affordability level for purchasing BUA (in Rs)

Affordability level for purchasing BUA (in Rs)

Affordability level for purchasing residential plot (in Rs) Graph 9: Relationship between income level and housing affordability Source: Tamil Nadu Housing Board (TNHB) 50

Map 9: Residential property price escalation from 2016 to 2018 Source: Data from TN registration department and 99 acres.com and map generated by author 51

Study area profile: Chennai

Land became very scarce in urban areas, the availability of land does not cater to the demand of the housing in future and it made private developers difficult in going with large scale housing development. The government made tax incentive scheme for housing especially to encourage the private sector development in the housing for large scale developments. The contribution of private sector has been increased as compared with Public sector and other Government agencies. The need of basis infrastructure facilities such as water supply, sewerage, Solid Waste Management, road, communication and rail has to be addressed by government sectors. Also other facilities such hospitals, entertainment, shopping and educational institutions are also has to be provided to motivate the private sector involvement in a way ease the public commutation. These social facilities are also provided by the private sectors in many locations of the city regions. Vertical construction is preferred for leaving ample open space rather than horizontal construction. The major challenge for the private sector is to bringing down the construction cost to make the housing units more affordable in the market for all income categories. It is mandatory to provide 10 to 20% for EWS with tax incentive will give a head way in subsidizing the sale of such weaker section requirement for housing. In most cases while addressing the affordability the adequate infrastructure is needed for such housing development is always neglected. The government and private sector should work close among each other to fulfil the demand of additional social and infrastructure facilities which can be made available for all income group people. Government should encourage the private developers for the affordable housing development by giving certain facilities such as development charges, sales tax, service tax relaxation and relaxation in processing fee. To avoid increase in cost of projects due to above factors, Government shall implement more simplified systems in processing the property development proposals.

3.11

Transformation of Chennai Housing Market

The city boundary has expanded to suburban areas. Old Mahaballipuram Road and Sriperumbudur became self- sustainable by itself before adding to GCC limit(Ramanathan, n.d.). These areas became a modern city by the development of IT corridor and many residential townships. It became a hotspot destination for real estate investments. Rapid rise in housing demand improved the market affordable to all income categories. Because high land prices and construction costs in the city core made housing unaffordable for many people. Tax incentives and other subsidies also given to make housing more affordable. In second master plan promotes the inclusive

52

and balanced growth, a futuristic outlook initiated by CMDA. PPP model, affordable cost with good quality housing. Encourages more vertical development to create more open space. Also it increases the number dwelling units which reduces the selling prices.

But the need of the infrastructure demand has been increased in the city. Subsidies also given to make housing more affordable. In second master plan promotes the inclusive and balanced growth, a futuristic outlook initiated by CMDA. PPP model, affordable cost with good quality housing.

3.12

Inclusive housing

Rapid Urbanization has led to increase in the number of slums causing tremendous pressure on basic services and infrastructure. People belonging to Economically Weaker Sections (EWS) as well as Low Income Group (LIG) are finding it difficult to own house. Owning a house for an urban poor has a multiplier effect in terms of better access to Municipal services like Potable Water Supply, Sewerage / Storm water facilities, Solid waste management and other related infrastructure.

Tamil Nadu Slum Clearance Board exclusively caters to the housing needs of EWS • Tamil Nadu Housing Board also caters to LIG • As per the Development Control Rules, 10% of Land is to be allotted to EWS/ LIG. • Basic Services to Urban Poor Scheme (BSUP), a sub-mission of JnNURM focuses on Mission cities while Integrated Housing and Slum Development Programme (IHSDP) gives thrust to Non Mission Cities.

• All ULBs are directed to Earmark a minimum of 25% of financial resources towards providing basic services to the urban poor.

3.13

Existing Floor Area Ratio

Residential buildings in the municipal boundary has high variations of FAR. Many wards has crossed the maximum permissible limit of 2 and also in other hand there are some other wards which has FAR less than 2. It show the uniform FAR is not possible throughout city. Based on the demand the high FAR is needed in some areas along with infrastructure facilities. Wards mostly located near to the core city has resulted in high FAR which is beyond 2 where the density is high. In few wards of West and South Chennai also has high FAR than the permissible level.

53

54

04

SITE SELECTION FOR INCLUSIONARY HOUSING MODEL 55

4.1

Selected wards

Four wards has been selected out of total 200 wards based on the availability of the vacant land, density, land use, real estate market growth and ownership. The wards are located within 15kms from the CBD and recorded high real estate property growth.

TNHB, TNSCB and private developers plays major role in housing supply. Private developers are the largest supplier in the city, but their main focuses is on MIG and HIG category. It makes formal housing market unaffordable to EWS and LIG groups in Ward 149: Valasaravakkam

Ward 86: Ambattur

Map 10: Residential land use of ward 149 and 86 Source: Existing land use plan -2007, Primary Survey

expensive localities of the city. The old wards near the city core which has already exceeded the maximum permissible FAR which has negative property growth rate due to infrastructure deficiency. Wards located in the periphery has recorded high property Ward 126: Foreshore Estate

Ward 198: Shollinganallur

Map 11: Residential land use of ward 126 and 198 Source: Existing land use plan -2007, Primary Survey 56

Site selection for IH models

growth rate due to less land price as compared to core areas and the vast availability of residential parcels. Inclusionary Housing model includes EWS and LIG through the cross subsidization from higher income categories. Higher income categories mostly prefer localities which has furnished with all kind of social and infrastructure facilities.

Infrastructure facilities has high correlation with type of income categories. It shows that higher income category people used to prefer the location with high infrastructure facilities where the land price is unaffordable to the Low-Income categories. Inclusionary Housing will help low income category people to buy the housing units in this expensive localities through cross- subsidization and additional FAR.

4.2

Disaggregated Housing demand

The percentage for disaggregated housing demand in each ward is shown below.

Household distribution based on income categories is identified through the primary survey. The sample size is taken based on the confidence level for respective wards.As per census of India and primary survey the hosuing demand as follows:

4.2.1 Ward 149 The total population of ward 149 is 25763 persons and percentage of EWS is 14% (3607 persons) followed by LIG 29% (7471 persons) , MIG 34% (8759 persons) and HIG 23% (5926 persons). Neighbourhood area around Valasaravakkam has high MIG hosuing demand.

4.2.2 Ward 86 The total population of ward 86 is 38724 persons and percentage of EWS is 29.2% (11307 persons) followed by LIG 32% (12392 persons) , MIG 26.8% (10378 persons) and HIG 12% (4646persons). The small and medium scale industrial area has high LIG housing demand.

4.2.3 Ward 126 The total population of ward 126 is 43585 persons and percentage of EWS is 8% (3487 persons) followed by LIG 26.5% (11550 persons) , MIG 31% (13511 persons) and HIG 34.5% (15037 persons). High HIG housing demand due to available neighbourhood facilities.

4.2.4 Ward 198 The total population of ward 198 is 20675 persons and percentage of EWS is 16% (3308 persons) followed by LIG 32% (6616 persons) , MIG 34% (7030 persons) and HIG 18% (3721persons). The area has high LIG and MIG housing demand due to upcoming IT industries.

57

Table 5: Details of selected wards

Selection criterias

?

Zone Wards

Location

11

149

Valasaravakkam

7

86

Ambattur

9

126

15

198

Landuse

Vijaya gardens

Residential

Private

TNHB VGM road

Residential

Government

Residential

Private

Residential

Government

Foreshore estate TNHB rental housing Shollinganallur

Ownership

Site name

TNHB layout

Source: Census of India 2011, Land use plan of CMDA, City Disaster management plan 2016 by GCC land,

4.3

Land price in selected wards

Land price in the selected wards varies from Rs.35525 to Rs.82000. The ward which lies within 5km to 10 km distance has resulted in high land price followed by ward 149 which lies above 10 km from the city center. The wards 86 and 198 newly added to GCC has less land price as compared to other selected wards. Ward 86 and 149 has price variation even though both the wards lie in the same distance from the city centre. It is due to the commercial and mixed development in Arcot road in ward 149 and industrial development in Ward 86 was the reason for low residential development in those surrounding areas. Also ward 86 is recently added to GCC which still lacks the basic urban services.

4.4

Cost outlay for housing units

Cost outlay for housing units are arrived to understand the current property price in selected neighbourhoods. The cost is taken from Tamil Nadu Registration Departemnt (TNRD)website and interview from developers.

4.4.1 Building works The average cost for building work in the city which includes installations of water supply, sanitary and electricity equipment are considered for arriving the affordability cost. The total cost is Rs 1490 per sqm. Water supply, sanitary and electrical installations 58

â&#x201A;š

M2 Gross Den- Vacant sity (pph) land(ha)

Population GR (Annual %)

Property price GR (Annual %)

Price per sqm (in Rs)

138

32

3.7

0.93

43060

74

22

3.6

4.55

35525

355

12

5.5

5.63

82000

11

23

14.4

2.75

37675

Tamil Nadu registration department, 99 acres.com and Primary Survey

cost. The total cost is Rs 1490 per sqm. Water supply, sanitary and electrical installations each cost Rs 497 per sqm. The cost require for building works is taken from TNRD which is common for entire city region.

4.4.2 Infrastructure works Further, the cost required for infrastructure networking such as roads, water supply and sewerage network, Solid Waste Management (SWM), street lights and landscape also added. The cost per sqm area of housing to the landscaping is Rs 43, streetlighting is Rs 645, for road is Rs.1075 and for sewerage management includes Rs. 280. The total cost of infrastructure works per sq m housing area requires Rs.2258. The cost for infrastructure network and building works are calculated by using these data which helped to arrive the per unit cost for each income group category. Further costs are included while calculating the overall price.

4.4.3 Total cost The total cost includes building works, infrastructure works, stamp duty charges whcih is taken 7.5% from total housing unit cost as mentioned in TNRD, Registration fee which is 1% from total housing cost as mentioned in TNRD and finally it also includes the percentage of profit as assumed by the developer (depends upon the ownership of the selected housing plot). The PPP model includes the admistration fee to be paid by the private developer to the government.

59

60

05

HOUSING DEVELOPMENT MODELS 61

HOUSING DEVELOPMENT MODELS

Inclusionary Housing (IH) models are developed in the selected sites from different wards in various localities. These models deal with housing affordability for all income categories in selected areas. The wards were selected based on the population growth, property price escalation, availability of vacant residential land along with possibility to develop different housing models. The land ownership and type of housing development varies for different housing models. The selected housing models are development by private developer in private land, development by government in government land, development by private in government land on PPP mode, Development by buyers on their own land which is purchased from government through Self Financing Scheme.

All the selected wards has uniform FAR, type of income group, dwelling unit size assigned by TNHB, construction and infrastructure cost, Stamp duty and registration charges and the affordability limit for purchasing the house. Factors such as land price (varies based on the locality), distribution of income category (varies based on the neighborhood land use and facilities), expected return from the project (varies based on the development type). These differences make variation in affordability limit across the city. The land price is the variable in all the models which reduce gradually while increasing the FAR. The building and supporting facilities cost has been taken from case studies and from Tamil Nadu registration department as mentioned before. These prices are constant for all type of models.

Four models has been selected based on the supply of housing units by Tamil Nadu Housing Board(TNHB), namely Private development on private land in Valasaravakkam along Arcot road for model one, Government development on government land in Athipattu within Ambattur locality for model two, Redevelopment of old government rental houses by private developers in Fore Shore estate for model three and finally housing development through Self Financing Scheme(SFS) where the residential plots are allotted by TNB based on lottery system and buyers can built their own house as per local regulations and norms.

62

Selected sites for IH models

5.1

Socio-economic distribution in selected wards

Ward 149 (43 samples)

Percentage Ward 126 (48 samples)

Percentage

8

14

23

26.5

34.5

29 34

31 EWS

EWS

LIG

MIG

LIG

MIG

HIG

HIG

Percentage Ward 86 (32 samples)

WardPercentage 198 (33 samples)

Percentage

12

18

14 29.2

23

32

26.8

29 3432

EWS

EWS

16

LIG

34 MIG

LIG

HIG

MIG

EWS

HIG

LIG

Graph 10: Socio-economic distribution in selected wards Source: City Disaster Management plan by GCC and primary survey

63

MIG

HIG

5.2 IH MODEL ONE DEVELOPMENT BY PRIVATE DEVELOPER ON PRIVATE LAND

Valasaravakkam is located along Arcot road near porur. The neighbourhood areas (Alwarthirunagar and porur) recorded high market demand. High economic activities in these areas attracts many residential and mixed-use developments. It comes under zone 11 and ward 149. It records the density of 138 person per hectare. The proposed area of 21.5 acre for private housing development is selected for demonstration. The property tax is aid in Half-yearly basis which is Rs.1.58 per sqft and the water tax is Rs.45 per 100 sqft floor area which is also paid by Half-yearly basis. The market value of the property in this zone is Rs.6460 per sqft vacant residential plot. The average land price in the ward 149, Valasaravakkam is considered as Rs 43060 per sq. m for a residential plot of 96035 sq. m comes to around Rs 4135267100.

Assuming the affordability limit for purchasing a dwelling as per guideline value is RS. 4000 per sqft. The residential land use is digitized in GIS with reference of existing land use plan and primary survey to identify. The percentage of Household that can afford EWS housing which is 28 sq m per DU is 14 % followed by LIG housing which is 42 sq m per DU is 29% in ward 149. To make the formal housing market reachable for EWS and LIG by adopting various measures if the cost per sq m can be reduced through allowing high FAR and reducing land markets distortions. Private developers can construct up to stilt or G + G+4 or G+3 on 65% plot coverage to make formal housing available for EWS and LIG. In total built up area 35% is allotted for EWS followed by 25 % for LIG in ward 149.

64

â&#x201A;š

IH model one

Estimated market price 5000000

5000000

4500000

4500000

4000000

5000000

3500000 3000000 2500000 2000000 1500000 1000000 500000 0

3500000 3500000 Cost in Rs

4000000

4000000 4000000 Cost in Rs

4500000

Cost in Rs

4500000

5000000

3000000 3000000 2500000

EWS

0

2500000

29.11L

1000000

2000000 1500000

500000 0

3000000

1500000

2000000

500000 1000000

3500000

2000000

2500000

1500000 1000000

45.72L

10.12L EWS LIG EWS

15.19L 500000 0

LIG

EWS

Income category HIG

MIG

Income category MIG LIG

Income category Land Cost

HIG

LIG

Land Cost MIG HIG Construction Cost Total infrastructure cost Expected return by the developer Registration Charges Stamp duty charges

Income category Construction Cost Land Cost Total infrastructure cost Construction Cost Land Cost Expected return by the developer Total infrastructure costConstruction Registration Charges Costhousing units in ward 149 GraphExpected 11: Estimated market price for return by the developer Stamp duty charges Total infrastructure cost Source:Registration Tamil NaduCharges registration department, 99 acres.com, Interviews of housing developers in Chennai Stamp duty charges Expected return by the developer

Registration Charges Stamp duty charges

5.2.1 Model one: Estimated market price Estimated property value is higher than the affordability level due to the high land cost. Market price for purchasing dwelling units are higher than buyers affordability limit. The affordability gap is identified seperately for each income category based on the average housing cost as determined by Tamil Nadu Housing Board.

5.2.2 Model one: Affordability gap The affordability level for purchasing a house in Valasaravakkam is 28.25% higher for EWS and 27.57% higher for LIG followed by 18.14% for MIG and 18.88% for HIG. But the current market price for purchasing the dwelling units for EWS and LIG are prohibitively huge that makes them search their dwelling units in the informal market, where the MIG and HIG income categories tend to purchase a house which is lower than their affordable level. Purchasing the dwelling units for EWS and LIG are prohibitively huge that makes them search their dwelling units in the informal market, where the MIG and HIG income categories tend to purchase a house which is lower than their affordable level.

65

MIG

5.2.3 Model one: Cross Subsidy In addition to the FAR, the subsidy is given to EWS and LIG categories to afford a house and bonus to developers for their profit. In the selected locality the 50% subsidy is given to EWS and LIG for the expected return which is cross subsidized from the HIG categories. The developer can occur more profit by selling the HIG units. Finally the saleable cost for each income categories are calculated for FAR 4 including the subsidies. This is affordable cost for various income categories in the selected ward in a private housing development in the private land.

5.2.4 Model one: Land cost to F.A.R Land cost is the major factor that increases the cost of the housing units which can be reduced by increasing the FAR. The land cost reduces if the number of unit increases where the land cost could share by more number of units.

5.2.5 Model one: Ground coverage As per the Development Control Regulation (DCR) of Chennai, the maximum ground coverage for primary residential building is 65% and height would be 15 meters or 1.5 times the width of the abutting road whichever less. If the plot is allotted with additional 5% plot coverage the total built up area could be accommodated within four

Scenarios of F.A.R cost of land Land cost to FAR

20 %

33.3 % 43 %

50 %

Cost in Rs

2000000 1800000 1600000 1400000 1200000 1000000 800000 600000 400000 200000 0

2

2.5 EWS

F.A.R 3 LIG

3.5 MIG

4 HIG

Graph 12: Land cost to FAR in ward 149 Source: Estimated market price and Tamil Nadu combined development and building rules, 2019 66

IH model one

floor height based on the walk up apartment height.

â&#x201A;š

Cross- subsidies

Developers expected profit from this development is considered as 25%. The developers has to give 75% subsidy in their expected profit to EWS and LIG. Instead developers will get 0.5 times additional profit from MIG and 1.5 times additional profit from HIG. Finally the expected profit form EWS and LIG is 6% followed by 30% and 58% for MIG and HIG.

5.2.6 Model one: Saleable cost The saleable cost is brought upto the affodable level of low income categories. The saleable cost for each income categories are calculated for FAR 4 including the subsidies. So, the model one suggestest that FAR 4 would be appropriate to accomdate low-income categories without any subsidies from the government. Only the percentage of expected return of the developer is cross-subsidised for low-income categories from high- income category. Meanwhile the FAR relaxtion also reduced the unit cost.

For F.A.R 4.5 Saleable cost 5000000 4500000

5000000

Cost in Rs

4000000 3500000 3000000 2500000 2000000 1500000 1000000 500000 0

Cost in Rs

4500000

4000000

3500000 3000000 3000000 2500000 2500000 2000000 2000000 1500000 1500000 1000000 1000000 500000 0 500000 0 3500000

Cost in Rs Cost in Rs

5000000

4000000

4500000 4000000

36.95L

3500000 3000000 2500000 2000000 1500000

22.11L

1000000 500000

10.67L 7.11L EWS

0

LIG

EWS MIG

LIG Income category HIG

Land Cost HIG Construction Cost Income category Total infrastructure cost Land Cost Income category Expected return by the developer Construction Cost LandLand Cost Cost Registration Charges Total infrastructure cost Construction Cost Construction Cost Stamp duty charges Expected return by the developer infrastructure cost Expected return by the developer TotalTotal infrastructure cost Registration Charges Expected byCharges theStamp developer Graph 13:return Saleable cost of based oncharges model one dutyhousing charges units Registration Stamp duty Registration Charges Stamp duty charges EWS

LIG EWS

Income category MIGLIG

67

HIG MIG

MIG

5.3 IH MODEL TWO DEVELOPMENT BY GOVERNMENT ON GOVERNMENT LAND

Ambattur is located in the West Chennai where the mostly the area is covered by small and medium size industries. People live in these localities depends on those industries for their employment. And people who own small ans medium sized industries also settle in this neighbourhood. The area is newly added to the GCC boundary. The new areas not provided with sufficient infrastructure facilities. This became a major reason for low land prices in these areas. The demand for HIG goups arev ery low as compared with LIG and EWS. Low land price made the steady growth of land and housing market. As per the study, the area recorded continuos growth in property market for past 8 years. This area became an upcoming destination for migrants.

The selected plot comes under zone 7 and ward 85. It records the density of 74 person per hectare. The proposed 54 acre for government housing is selected for demonstration. The property tax is aid in Half-yearly basis which is Rs.1.68 per sqft and the water tax is Rs.168 per 100 sqft floor area which is also paid by Half-yearly basis.

The market value of the property in this zone is Rs.4675 per sqft and Guideline value is RS. 3300 per sqft. TNSCB and TNHB owns abdutant land in this locality. Private developers participation is very less due to poor urban services. HIgh-rise buildings in this area are mostly built by government or partnership between public and private. Most of existing buildings in this location are independent villas or small dscale housing units.

68

IH model two â&#x201A;š

Estimated5000000 market price 4500000 5000000

4000000

00000

4500000

3500000

00000

4000000

00000

00000

00000

00000

3500000 2500000

2000000 2500000

500000

0

1000000

1500000 1500000

00000

2500000 1500000

2000000 1000000

3000000 2000000

3000000

00000

00000

Cost in Rs

Cost in Rsin Rs Cost

00000

3000000

500000 0

1000000 0 500000

EWS

LIG Income category

EWS

LIG

MIG

HIG

Land Cost Income 0 LIG EWS MIG category HIG Construction Cost EWS LIG MIGTotal infrastructure HIGcost Income category Land Cost Expected return by the developer Construction Cost Income category Registration Charges Land Cost Total infrastructure cost Stamp duty charges Construction Cost Expected return by the developer Land Cost Construction Cost Total infrastructure cost Total infrastructure costRegistration Charges Graph 14:return Estimated market price for housing units in ward 86 Expected by theStamp developer duty charges Registration Charges Source: Tamil Nadu registration department, 99 acres.com, Interviews of housing developers in Chennai Registration Charges Stamp duty charges Stamp duty charges

5.3.1 Model two: Estimated market price The estimated market price is higher than the affordabiltiy limit for EWS and LIG. But the affordability level matches for the MIG and HIG groups. But these areas recorded very low HIG demand due to poor urban services. Governmenr does not expect any profit form this development. Buyers has to pay other expenses.

5.3.2 Model two: Affordability gap The affordability level for purchasing a house of EWS and LIG is higher than their income. The MIG and HIG can afford the houses in this surrounding locality due to less land price of residential plots.

5.3.3 Model two: Cross Subsidy and profit In addition to the FAR, the subsidy is given to EWS and LIG categories to afford a house and bonus to developers for their profit. The affordability of the MIG and HIG is already in the desirable level so 10% is assumed for profit or expected return for the government.

69

MIG

If 10% profit is assumed for the govenment

10%

3500000

28 L

Cost in Rs

3000000 2500000

21.7 L

2000000 1500000 1000000

8.6 L

12.7 L

500000 0

EWS

LIG MIG Income category

HIG

Land Cost for model two Graph 15: Cost Assumption of profit in percentageConstruction to the government infrastructure Expected return by the developer 5.3.4 Total Model two: cost Land cost to F.A.R Registration Charges Stamp duty charges The FAR has to be increased further along with 10% profit for the government only from MIG and HIG to achieve the affordable cost. If the FAR has increased little further the government can expect 10% profit from the total saleable cost of MIG and HIG.

Scenarios of F.A.R cost of land Land cost to FAR 1600000 1400000

Cost in Rs

1200000 1000000 800000 600000 400000 200000 0

2 EWS

2.5 F.A.R LIG MIG HIG

3

Graph 16: Land cost to FAR in ward 86 Source: Estimated market price and Tamil Nadu combined development and building rules, 2019 70

IH model two

5.3.5 Model two: Ground coverage The housing development model requires 70% of ground coverage for four floor height.

If this development considers 65% of the plot coverage then the floor will be five that is not considered as a walkable apartments. As per DCR, the maximum ground coverage is 65% which has to increased upto 70%.

5.3.6 Model two: Saleable cost The market value of the properties are very low as compared to other areas of the city due to low urban services. On the other hand he neighbourhood area has to be furnished with sufficent infrastructure facilities and urban services. The reasons for low land price in these areas are the availability of vacant residential parcels and poor urban services. Government can assume 10% profit from MIG and HIG. Because the affordability level of MIG and HIG is much higher due to low land prices. Placing the high income and middle income groups will be more beneficial for government. The surrounding neighbourhood has to be facilitated with adequate services to increase the housing demand of high income groups.

Saleable Forcost F.A.R 3 5000000 4500000

5000000

000000

500000

000000

500000

2500000 3500000

Cost in Rs

500000

4000000

Cost in Rs

000000

3000000

2000000

17.8 L

10.2 500000 L

1000000 1000000

0

6.8 L

500000

0

2500000

1000000

1500000

500000

3000000

1500000

1500000

500000 0

28.2L

3500000

2000000

2500000 2000000

000000 0

Cost in Rs

000000

500000

4000000

3000000 4500000

EWS

LIG

EWS MIG

LIG Income category HIG

Land Cost EWS LIG MIGConstruction CostHIG Income category Total infrastructure cost Land Cost Income category Expected return by the developer Construction Cost Land Stamp Cost Total infrastructure cost duty charges RegistrationRegistration Charges Charges Construction Cost Stamp duty charges Expected return by the developer by the developer Total infrastructure cost Total Expected infrastructurereturn costRegistration Charges Expected by the developer Stamp chargesunits based Construction Cost Land Graph 17:return Saleable cost ofduty housing on Cost model two Registration Charges Stamp duty charges

EWS

LIG

Income category MIG

71

HIG

MIG

5.4

IH MODEL THREE

DEVELOPMENT BY PRIVATE DEVELOPER ON GOVERNMENT LAND

Foreshore estate is located in located near Adyar where most of the area is covered by residential properties. It comes under zone 9 and wards 126. It records the density of 355 people per hectare. The proposed area of 68 acres for redevelopment government housing project area demonstration. The property tax is paid in Half-yearly basis which is Rs.1.72 per sqft and the water tax is Rs.47 per 100 sqft floor area which is also paid by Half-yearly basis. The market value of the property in this zone is Rs.6860 per sqft and Guideline value is RS. 4560 per sqft. The area residential development is digitized in GIS with reference to existing land use plan and primary survey. The ward 126 is located between 5 km to 10km from the CBD, the expensive locality of the city area. The beach side view and government employee rental housing has increased the prices.

Also, the area is well connected with economic thriving neighbourhoods. The expenditure on all internal development works (as mentioned in Model one) shall be borne by the developer only. He will not be allowed to charge the internal development cost to EWS/LIG flats. Government land is offered to private developer through open bidding process for free of cost. But the developer has to pay land acquisition cost and administration cost to the government as specified under local norms. The developer should offer the dwelling units as per the existing demand of different socio-economic groups. The developer would choose the minimum land for commercial purposes to cross- subsidize the cost of EWS and LIG housing. Developer will get the same com72

IH model three 5000000

â&#x201A;š

Estimated market 4500000 price

5000000

00000

00000

00000

00000

00000

00000

00000

00000 0

Cost in Rs

00000

4000000

Cost in Rs Cost in Rs

00000

4500000 5000000 4000000 4500000 3500000 4000000 3000000 3500000 2500000 3000000 2000000 2500000 1500000 2000000 1000000 1500000 500000

1000000 0 500000

EWS

0

3500000

45.72L

3000000 2500000 2000000 1500000

29.11L

1000000

10.12L EWS LIG EWS Income category Land Cost

15.19L

500000 0

LIG Income category MIG LIG

EWS MIG HIG MIG

Income category

LIG Income category HIG

Land Cost Construction Cost HIG Total infrastructure cost Expected return by the developer Registration Charges Stamp duty charges

Construction Cost Land Cost Total infrastructure cost Land Cost return by the developer Construction Cost Expected Construction Total infrastructure costRegistration Cost Charges Graph 18: return Estimated market price for housing units in ward 126 Total infrastructure cost Expected by the developer Stamp duty charges Expected return the developer Source: Tamil Nadu registration department, 99by acres.com, Interviews of housing developers in Chennai Registration Charges Registration Charges Stamp duty charges Stamp duty charges

5.4.1 Model three: Estimated market price

The estimated housing prices are very high in this region which cannot be afford by low-incoem groups. HIG people are willing to purchase the MIG housing units and MIG are willin gto purchase the LIG units. This also became one of the main reason for affordable housing shortage in expensive localities of the city.

5.4.2 Model three: Affordability gap According to this model, the developers can construct EWS, LIG, MIG and HIG flats in the identified government/ULB land through open bidding process. These saleable flats can be allotted for rental purposes also. A minimum of 8% EWS and 26.5% of LIG housing units would be constructed. In the remaining built up area the developer is free to construct MIG and HIG flats as per model one.

5.4.3 Model three: Cross Subsidy The subsidies are given as per model one for both the buyer and developer. No infrastructure and registration charges is allotted for LIG and MIG. External development charges will be borne by ULBs & charged to subsidy fund & BSUP fund. ULBs can 73

charge part amount to their present / future / nearby schemes. In no case external development will be charged to the EWS/LIG houses.

â&#x201A;š

Cross- subsidies

To accommodate the EWS and LIG category in this area 100% infrastructure cost, registration charges and 50% subsidy in stamp duty fee is cross subsidized form HIG units. Moreover, the expected profit is given from only form MIG and HIG. EWS and LIG were set free from this charges also. Even though the developer will get high profit due to the more number of MIG and HIG units.

5.4.4 Model three: Land cost to F.A.R The high demand is recorded from HIG followed by MIG as compared with Lowincome groups due to the surrounding neighbourhood facilities. The appropriate FAR in ward126 is highest among all other four selected wards. As mentioned earlier, very

Scenarios of F.A.R cost of land Land cost to FAR 20 %

33.3 % 43 %

Cost in Rs

2000000 1800000 1600000 1400000 1200000 1000000 800000 600000 400000 200000 0

2

2.5 EWS

F.A.R 3 LIG

50 %

3.5 MIG

4 HIG

Graph 19: Land cost to FAR in ward 126 Source: Estimated market price and Tamil Nadu combined development and building rules, 2019 74

IH model three

high land cost along with low FAR norms that does not suitable to accomdate the lowincome categories. By increasing the FAR, the land cost could be reduced upto 50% .

5.4.5 Model three: Ground coverage The housing development model requires 70% of ground coverage for four floor height.

If this development considers 65% of the plot coverage then the floor will be five which is not considered as a walkable apartments. The ground coverage along with high FAR will solve the issues of informal settlements. Moreover, government also should give exemption in registration and other fee for low-income groups.

5.4.6 Model three: Saleable cost The expensive localities does not support poor or low-income groups to make their formal housing. Due to high land price people tend to make informal settlements such as slums and squatters. Foreshore estate in ward 126 have abudant informal settlements who cannot able to afford houses in their neighbourhood. The saleable cost is arrived in the expensive locality of the city which will be affordable for all income groups.

For F.A.R 4.5 5000000 Saleable cost 4500000

5000000

000

000

000

000

000

000

000

000 0

Cost in Rs

000

4000000

3500000 3500000 3000000 3000000 2500000 2500000 2000000 2000000 1500000 1500000 1000000 500000 1000000 0 500000 0 EWS Cost in RsCost in Rs

000

4000000

4500000 4000000

36.95L

3500000 3000000 2500000 2000000 1500000

22.11L

1000000 500000

10.67L

0

EWS

7.11L EWS

LIG

MIG

LIG Income category HIG

Land Cost Cost EWS LIG MIG Construction HIG Total infrastructure cost Income category Land Cost Income category Expected return by the developer Construction Cost Registration Charges LandLand Cost Cost Total infrastructure cost Construction Cost Stamp duty charges Construction Cost Expected return by the developer TotalTotal infrastructure costRegistration Charges infrastructure cost Expected return by the developer Graph 20:return Saleable ofduty housing units based on model three Expected by thecost developer Stamp charges Registration Charges Stamp duty charges Registration Charges Stamp duty charges LIG

Income category MIG

75

HIG

M

5.5

IH MODEL FOUR

SELF-FINANCE SCHEME (SFS)

The site selected to develop model four is belongs to Tamil Nadu Housing Board under Self-Finance Scheme(SFS). Site is located in Shollingallur, the emeging IT hub of the city.

Shollinganallur lies in the South most part of the city region in ward 198, zone 15. The selected site is surrounded by commercial and residential neighbourhoods. The land cost in Shollinganallur is 53539 Estimated cost for land is higher than affordability level for income categories. Mostly, the plots in the SFS site is divided into seperate categories which represents the different socio-economic categories. As per thumb rule 20 percentage of the total property cost is assumed as land cost. Because the plot prices are very high due to the upcoming demand and growth of economic activities in the surrounding neighbourhoods.

The land cost has to be further reduced to match the demand. The demand from Lowincome households for purchasing residential plots are very due to high land cost. Very less plots are offered for low-income categories. If the land cost and plot coverage is reduced more number units can be accomdated in these areas. Increasing the FAR will further encourage the low-income households to purchase the plots. The site is well connected with bus routes to the entire city region. The neighbourhood area around the selected site is mostly occupied by low-inomce and middle-incoem categories. Due to the emergence of IT industries the number high income and upper middle income households has been increased. The neighbourhood areas resulted in high real estate 76

5000000 4500000

4500000 4000000 4000000 3500000

Cost in Rs

4000000

3500000 3000000â&#x201A;š 3000000 2500000

1500000 1000000 1000000 500000 5000000 0

IH model four

3500000 3000000

Estimated market price

2500000 2000000

2500000 2000000 2000000 1500000

Cost in Rs

Cost Cost in Rs in Rs

5000000 5000000 4500000

2500000 2000000 1500000 1000000 500000 EWS EWS 0

1500000

45.72L

29.11L

1000000 500000 0

15.19L

EWS

4L

LIG LIG Income category EWS Income category LIG

LIG

MIG

Income category

MIG HIG MIG HIG Land Cost ConstructionMIG Cost HIG Total infrastructure cost Income category Land Cost Expected return by the developer Land Cost Total infrastructure cost Land Cost Construction Cost Registration Charges Registration Charges Stamp duty charges Construction Cost cost Stamp duty charges Total infrastructure

Total infrastructure Expected returnprice by cost thefor developer Graph 21: Estimated market housing units in ward 198 Expected return by the developer Registration Charges Source: Tamil Nadu registration department, 99 acres.com, Interviews of housing developers in Registration Charges Stamp duty charges Chennai Stamp duty charges

5.5.1 Model four: Estimated land price In SFS Scheme, the buyers has to pay only ofr ht eserviced land . As per thumb rule mentioned by TNHB , the oland of any type housing units is considered as 20% from the whole affordabe cost. Based on this assumption the land cost for various income groups has been identified. The estimated land cost were higher than affordability limit of the buyers for purchasing the serviced plots.

5.5.2 Model four: Affordability gap The estimated land cost is hihger than the affordable limit in the selected site. The cost of the residential plots has to be reduced upto 50% for EWS and LIG followed by 45% for MIGand 30% for HIG. Though it is a government land the EWS and LIG groups will get subsidy or exemption in registration fee and stamp duty charges.

5.5.3 Model four: Cross Subsidy Cross subsidy is given in infrastructure cost, registration cost and in stamp duty charges for EWS people followed by registration cost and stamp duty charges to LIG from MIG and HIG. The government is charging only for land and infrastructure through site and services scheme. Anna Nagar was the successful model for this Site and Services scheme. The government I expecting same development in Shollinganallur in upcoming features.

77

â&#x201A;š

Cross- subsidies for low-income groups

For EWS and LIG the cross-subsidy is given in registration and stamp duty charges and additional subsidy infrastructur to EWS. Though it is government land, 100% subsidy in infrastructure to EWS and also 100% subsidy in registration charges and stamp duty charges has to be given to EWS and LIG category by the government. Subsidization reduced the unit cost of EWS by 22% followed by 7% for LIG.

5.5.4 Model four: Land cost to F.A.R To reduce the cost of the vertical development is suggested where the land price could be served by many dwellers. The FAR has been increased gradually to reduce the cost of land. The minimum F.A.R needed to be imposed in these areas is 4.5. Cost of the unit is reduced by 40% for HIG and 41% for MIG followed by 50% for LIG and EWS. Increasing the FAR for individual plots will automatically reduce the consumption of serviced land and also it increases the number of housing units. Thus the serviced land cost could be shared by more number of units which impacts in overall unit cost.

Scenarios of F.A.R cost of land Land cost to FAR 1000000

Land cost to FAR 33.3 %

50 %

800000

600000 Cost in Rs

Cost in Rs

1000000 800000

55 %

600000

400000

400000

200000

200000

0

0

2

2

3

3 F.A.R EWS LIG MIG F.A.R HIG EWS LIG MIG HIG

Graph 22: Land cost to FAR in ward 198

4

4

Source: Estimated market price and Tamil Nadu combined development and building rules, 2019 78

4.5 4.5

IH model four

5.5.5 Model four: Ground coverage Ground coverage is assigned as per DCR norms. The plots has to follow the minimum setback and maximum ground coverage as per DCR. The height of the individual residents should be 1.5 times of the abutting road or street width or 15 m height whichever less. The maximum plot coverage as per DCR in Corporation boundary is 65% to be followed in this SFS scheme.

5.5.6 Model four: Saleable cost The affordability level for purchasing housing plots for various income categories is achieved if the FAR is increased up to 4.5. The saleable cost of plots for FAR 4.5 is calculated. This gives the affordable land prices for various income categories. This type sites which are used for SFS schemes are already furnished with public services.

Subsidization reduced the unit cost of EWS by 22% followed by 7% for LIG. Cost of the unit is reduced by 40% for HIG and 41% for MIG followed by 50% for LIG and EWS.

000 000 000

5000000 4500000 Saleable cost of housing plots in ward 198

000 000 000 000

000 000 000 000

000 000 000 000

0000 0

Cost in Rs

800000 700000 600000 500000 400000 300000 200000 100000 EWS 0 EWS

3500000 3000000

7.28L

2500000 2000000

Cost in Rs

000 000 000 000

4000000

1500000 1000000

6.72L

500000

1.4 L LIG LIG Income category EWS Income category

2.04 L MIG MIG

0

EWS

HIG HIG

LIG Income category

Land Cost LIG MIG Construction Cost HIG Income category Total infrastructure cost

Land Cost Expected return by the developer Land Cost Cost Construction Registration Charges cost Land Total infrastructure Construction Cost Cost Stamp duty charges Total infrastructure cost Total infrastructure Expected return by cost the developer Registration Charges Stamp duty charges Graph 23: Saleable of housing units based on model four Expected return by developer Registration Chargesthecost Registration Charges Stamp duty charges Stamp duty charges 79

MIG

80

06

INFERENCE AND CONCLUSION 81

6.1

Relaxing the FAR

Relaxing the FAR norms for cross- subsidization scheme will tackles the problem to some extend for developers. While such relaxations tackle the problem of low FARs as well as density constraints, this is not the most appropriate solution.

Cross-subsidization offsets the price reduction due to FAR and density relaxation. In addition, FAR relaxation will be successful if it is generally applicable to all sorts of housing projects.

While the issue is addressed to some extent by narrow relaxations, significant effects can only be felt after this relaxation has been systemically implemented.

6.2

Substituting capital for land

A usual approach to expensive and scarce urban land by constructing multiple stories is to substitute a cheaper and much more readily expandable factor, capital for land. Increasing the number of stories is a typical solution for making expensive urban land cheaper that produces quality development in good locations. The regulation which limits FAR in a good location of a city also reduces the land availability for housing development in that well-located area. Expect India most of the cities in the world even low and middle income countries allows maximum permissible FAR. Only little variation in FAR is observed from the city centre to the periphery in Indian cities.

6.3

Inference

Housing affordability

Cross- subsidization, maximum permissible FAR and reduction of government fee (if necessary) reduces the burden of the low income categories for purchasing new houses in expensive localities of the cities. This makes formal market more accessible to all type of socio-economic categories.

82

Inference

6.4

Role of the developer

Developers has to supply the housing units as per existing demand.

The quality and safety of the building and workers during construction has to be ensured by the developer..Also the developer has to make all other supporting facilities including parking and physical infrastructure and commercial area if necessary including the provision of provision for landscape and open spaces or parks as per local norms and guidelines. Another important aspect is the project delivery within specified time. Finally, the developer has to ensure affordable housing for EWS/LIG category as per demand.

6.5

Role of the Urban Local Bodies

Urban Local Bodies should ensure the vacant plots for housing development for all income categories based the demand on that particular area. The land can be either government or private. The main concern of the Urban Local Bodies should be the provision of affordable housing for the poor. The utilization of subsidies for Affordable Housing bshould be based on the policy guidelines.

The allottment of dwelling unit distribution should ensure the supply for existing disaggregated demand. The Urban Local Bodies must take the responsiility of managing and completing the project within specified time and co-ordinating the various stakeholders in volved in the project.

6.6

Policy on Inclusionary Housing

The issues regarding the land titling and building construction should be resolved through tenure rights. Non taxing non-poor and non-rich segments and reducing house taxes across the board for all income groups: High end properties could be taxed to cross subsidise public housing and affordable housing.

83

Image used for representational purpose 84

Inclusionary Housing along with appropriate FAR is a way forward for Indian cities to maximize the low-income housing in formal markets. Low FAR consumption in Indian cities became a major barrier for Inclusionary housing practice. The theoretical model derived from various Inclusionary case studies in western countries helped to achieve the basic IH model for Chennai city. Along with Inclusionary Housing model, this thesis also includes the relaxation of FAR norms to further reduce the financial burden of low income categories. This model is applicable for all parts of the city, only varies based on the land ownership and type of housing supply in that particular neighbourhood. The development also focuses on the expansion of public infrastructure and its maintenance by charging establishment and impact fees.

This thesis explores the different development models by removing certain institutional constraints for making housing more affordable to low-income categories without any subsidies from the government. These constraints usually vary for locations which has to be assessed carefully to help private developers for making affordable houses. The constraints such as land availability and insufficient infrastructure in the urban areas became the reason for limiting the supply of affordable units. Massive investment in urban basic services such as transportation, water supply, electricity, SWM, Sanitation, infrastructure and other facilities to facilitate the need for housing units.

6.7 Conclusion

Unlocking the land supply for such developments and relaxation of Floor Area Ratio along with the high standards for formal housing makes housing more unaffordable to the poor.

Land titling, property rights, ownership of land and the permission for redevelopment to be clarified. Inclusionary Housing (IH) is most successful in Western countries. In a developing countries like India Inclusionary Housing model will reduce the demand of informal housing market. This will reduce the informal settlements in the city regions such as squatters and slums.

85

86

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ANNEXURE 93

A.

List of graphs

Graph 1: Number of Metropolitan cities and percentage of population in India

15

Graph 2: Estimated Urban Shortage in India by housing type (Millions) â&#x20AC;&#x201C; 2012

18

Graph 3: Maximum permissible F.A.R in world cities

27

Graph 4: FAR and Cost of Land

31

Graph 5: Number of Inclusionary Housing Programs by the Incentive to developers 34 Graph 6: Spatial distribution of population in Chennai from 1981 to 2011 Graph 7: Preferred property type

Graph 8: Preferred location

54 58 58

Graph 9: Relationship between income level and housing affordability

62

Graph 10: Socio-economic distribution in selected wards

75

Graph 11: Estimated market price for housing units in ward 149

77

Graph 12: Land cost to FAR in ward 149

78

Graph 13: Saleable cost of housing units based on model one

79

Graph 14: Estimated market price for housing units in ward 86

81

Graph 15: Assumption of profit in percentage to the government for model two 82 Graph 16: Land cost to FAR in ward 86

82

Graph 17: Saleable cost of housing units based on model two

83

Graph 18: Estimated market price for housing units in ward 126

85

Graph 19: Land cost to FAR in ward 126

86

Graph 20: Saleable cost of housing units based on model three

87

Graph 21: Estimated market price for housing units in ward 198

89

Graph 22: Land cost to FAR in ward 198

90

Graph 23: Saleable cost of housing units based on model four

91

94

Contents

B. List of tables Table 1: Land usage pattern in Chennai

48

Table 2: Population of Greater Chennai Corporation from 1991 to 2011

50

Table 3: Permissible FAR

52

Table 4: Eligible income criteria for allotment

Table 5: Details of selected wards

C.

60 70

List of maps

Map 1: Inclusioanry Zoning laws by state in U.S

35

Map 2: Population density

49

Map 3: GCC population 1991

51

Map 4: GCC population 2001

53

Map 5: GCC population 2011

55

Map 6: GCC population from 1991 to 2001

57

Map 7: GCC population from 2001 to 2011

59

Map 8: Residential property price escalation from 2014 to 2016

61

Map 9: Residential property price escalation from 2016 to 2018

63

Map 10: Residential land use of ward 149 and 86

68

Map 11: Residential land use of ward 126 and 198

68

D.

List of figures

Figure1: Modified Inclusionary Housing Program

33

Figure 2: A policy brief by AHURI and snapshot of the most significant inclusionary zoning programs

37

Figure 3: Charkop site and services scheme site

38

95

Basic calculations for arriving Dwelling Unit cost Table 1: Analysis of cost of residential properties (Ward 149)

Component

â&#x201A;š Per Sq m â&#x201A;š Per Unit EWS

LIG

MIG

HIG

A

Land Cost

21530

602840

904260

1399450

1808520

B

Construction Cost

6622

185416

278124

430430

556248

Infrastructural networks

496.65

13906.2

20859.3

32282.25

41718.6

Total infrastructure cost

496.65

13906.2

20859.3

32282.25

41718.6

Subtotal (A+B+C)

496.65

13906.2

20859.3

32282.25

41718.6

D

Expected return by the developer=20% (D)*(.25) 2257.5

63210

94815

146737.5

189630

D

Estimated Property Value (A+B+C) 3747.45

104928.6

157392.9 243584.25 314785.8

E

Registration Charges = 1% of property value 382.7934

9378.4383 14067.657 26955.035 42336.950

F

Stamp duty charges= 7% of property value 31899.45

893184.6

1339776.9 2073464.25 2679553.8

G

Amount payable by the buyer(D+E+F) 6379.89

44659.23

66988.845 622039.27 1554141.2

C

Table 2: Ward 149 - Total no of units to F.A.R No of units

F.A.R

Total built up area

EWS

LIG

MIG

HIG

Total

2

192070

480

960

1123

755

3318

2.5

240087.5

600

1200

1404

943

4147

3

288105

720

1441

1684

1132

4977

3.5

336122.5

840.31

1680.61

1965.02

1320.48

5806.42

4

384140

1920.70

2652.40

2009.34

1051.811

7634.25

96

Calculations

Table 3: Ward 86: Analysis of cost of residential properties â&#x201A;š Per Sq m â&#x201A;š Per Unit

Component A

Land Cost

B

Construction Cost

EWS

LIG

MIG

HIG

17762.5

497350

746025

1154562.5

1492050

6622

185416

278124

430430

556248

13906.2

20859.3

32282.25

41718.6

13906.2

20859.3

32282.25

41718.6

Water supply installations (7.5%) 496.65 Sanitary installations (7.5%) 496.65

C

Electricity installations (7.5%) 496.65 Infrastructural networks 2257.5

13906.2

20859.3

32282.25

41718.6

63210

94815

146737.5

189630

Total cost

3747.45

104928.6 157392.9

243584.25

314785.8

28131.95

787694.6 1181541.9

1828576.75

2363083.8

78769.46 118154.19

182857.675

236308.38

infrastructure

Subtotal (A+B+C) D

Expected return by the developer=20% (D)*(.25)

D

Estimated Property Value (A+B+C)

E

Registration Charges = 1% of property value

F

Stamp duty charges= 7% of property value

28131.95

866464.0 1299696.09 2011434.425 2599392.1

281.3195

8664.64

G Amount payable by the buyer(D+E+F) 1969.23

12996.96

60652.48 90978.72

20114.34

25993.921

140800.48

181957.45

Table 4: Ward 86 - Total no of units to F.A.R

F.A.R

No of units Total built EWS LIG up area

MIG

HIG

Total

2

124126

798

668

310

2530

798

2.5

155157.5

997

835

388

3163

997

3

186189

1197

1003

465

3795

1197

97

Table 5: Ward 126: Analysis of cost of residential properties Component A B

Land Cost Construction Cost Water supply installations (7.5%) Sanitary installations (7.5%) Electricity installations (7.5%) Infrastructural networks C Total infrastructure cost Subtotal (A+B+C) D Expected return by the developer=20% (D)*(.25) D Estimated Property Value (A+B+C) E Registration Charges = 1% of property value F Stamp duty charges= 7% of property value G Amount payable by the buyer(D+E+F)

â&#x201A;š Per Sq m â&#x201A;š Per Unit EWS 41000 1148000 6622 185416

LIG 1722000 278124

MIG 2665000 430430

HIG 3444000 556248

497

13906

20859.3

32282.25

83437.2

497

13906

20859.3

32282.25

83437.2

497

13906

20859.3

32282.25

83437.2

497

13906

20859.3

32282.25

83437.2

2258 3747

63210 104929

94815.00 157392.90

146737.50 243584.25

189630.00 439941.60

10274

287669

431503.38

667802.85

888037.92

51369

1438345

2157516.90 3339014.25

4440189.60

10274

287669

431503.38

888037.92

61643

1726014

2589020.28 4006817.1

5328227.52

616

17260

25890.20

53282.28

667802.85

40068.17

Table 6: Ward 126 - Total no of units to F.A.R No of units F.A.R

Total built up area

EWS

LIG

MIG

HIG

Total

2

179626

257

727

884

984

2852

4

359252

513

1454

1769

1967

5703

5

449065

642

1818

2211

2459

7129

5.5

493971.5

706

1999

2432

2705

7842

98

Calculations

Table 7: Ward 86: Analysis of cost of residential properties Component A B

C D E

Land Cost Total infrastructure cost Subtotal (A+B+C) Estimated Property Value (A+B+C) Stamp duty charges= 7% of property value Amount payable by the buyer(D+E+F)

₹ Per Sq m

₹ Per Unit EWS

LIG

MIG

HIG

22843.75

319812.5

753843.75

1690437.5

1781812.5

2257.50

63210

74497.5

167055

176085

2257.50

63210

74497.5

167055

176085

25101.25

383022.5

828341.25

1857492.5

1957897.5

25101.25

383022.5

828341.25

1857492.5

1957897.5

251.01

5745.337 5

12425.1187 5

18574.925

19578.975

Table 8: Ward 86 - Total no of units to F.A.R

No of units F.A.R

Total built up area

EWS

LIG

MIG

HIG

Total

2

107078.00

612

1038

492

247

2389

3

160617

918

1557

738

371

3584

4

214156

1224

2077

984

494

4779

240925.5

1377

2336

1107

556

5376

4.5

99

IH model one: Private development on private land

Land Construction Infrastructure

₹

Stamp duty Registration fee Developers profit

Estimated market price Estimated housing price is higher than the affordable cost for all categories

Subsidy for EWS and LIG in expected profit of the developer

Further the cost of land would be reduced by increasing the F.A.R

₹ Affordability Gap

₹

High end properties could be taxed to cross subsidise the low -income units

Cross-Subsidy

F.A.R cost of land Unit cost is reduced by 20% for HIG, 16% for MIG, 11% for LIG and 8% for EWS

Reduced the unit cost of EWS by 9% and 6% for LIG

Saleable cost 100

IH model two: Government development on Government land Land Construction Infrastructure

â&#x201A;š

Stamp duty Registration fee

Estimated market price Estimated housing price is higher than the affordable cost of EWS and LIG

Adding 10% profit to government

Further the cost of land would be reduced by increasing the F.A.R

â&#x201A;š Affordability Gap

10% Profit

High end properties could be taxed to cross subsidise the low -income units

Expected profit

F.A.R cost of land

Adding additional 10% of the property value to the overall unit cost of the MIG and HIG

Unit cost is reduced by 19.5% for LIG and EWS

Saleable cost 101

IH model three: Private development on government land Land Construction Infrastructure

₹

Stamp duty Registration fee Developers profit

Estimated market price Estimated housing price is higher than the affordable cost for all categories

Subsidy for EWS and LIG in expected profit of developer and infrastructure cost

₹

Further the cost of land would be reduced by increasing the F.A.R

Affordability Gap

₹

High end properties could be taxed to cross subsidise the low -income units

Cross-Subsidy

F.A.R cost of land

Unit cost is reduced by 37% for HIG, 42% for MIG, 50% for LIG and EWS

Reduced the unit cost of EWS and LIG by 10%

Saleable cost 102

IH model four: Self-Finance Scheme

₹

Land Construction Infrastructure

Stamp duty Registration fee Developers profit

Estimated market price Estimated housing price is higher than the affordable cost for all categories

Subsidy for EWS and LIG in infrastructure cost, registration and stamp duty charges

Further the cost of land would be reduced by increasing the F.A.R

₹ Affordability Gap

₹

High end properties could be taxed to cross subsidise the low -income units

Cross-Subsidy

F.A.R cost of land Land cost is reduced by 40% for HIG, 41% for MIG, 50% for LIG and EWS

Reduced the land cost of EWS by 22% and LIG by 7%

Saleable cost 103

PG thesis report by T.N.Navabharathi Scholar No: 2017MURP005 Masters in Urban and Regional Planning (MURP) Department of Planning School of Planning and Architecture, Bhopal 104