Speed up reform to boost housing sector

As talk on affordable housing rises to a crescendo, major reasons behind the inflated housing prices remain unaddressed. A reviewed Building Code expected to come into force by year-end may offer the much-needed reprieve, especially by broadening the range of building materials.

However, Government needs to look beyond this and set the pace for a housing revolution.

Housing reform needs to include specific interventions. For instance, the mortgage tax relief has not done much to encourage more people into securing mortgages. Home buyers need to enjoy more tax reduction on mortgage interest.

Successful housing reforms, like that enforced by the Indian government, had housing finance institutions benefit from more liberal prudential requirements, refinancing arrangements with mainstream banks and sustained Government support for securitised debt instruments.

Companies also need to receive tax incentives to establish employee-housing schemes. Developers may be a greedy lot, but they are in business for profit.

First steps

Incentives for developers may include reduction and harmonisation of stamp duty, introduction of special economic zones, letting housing projects be classified as infrastructure, access to competitive equity funds and limited tax holidays.

Government also needs to undertake infrastructure development in low-income areas like access roads, water, electricity, sewerage systems and street lighting. Also, cutting red tape and checking corruption would be first steps towards decent, affordable housing.