Housing counts as a basic human necessity. However, owning the same seems to be a mere dream for many due to its ever-skyrocketing prices. This is unfortunate but a reality, majorly affecting India’s economy.
As per the Housing and Urban Affairs ministry, the country faces a shortage of approximately 20 million housing units. Nevertheless, finance experts have curated and continue researching finance models to cover this gap and make housing affordable in India.
Additionally, the government has launched various initiatives to provide affordable housing. To further complement, innovative financing models have also emerged as a crucial tool to bridge the gap between demand and supply.
Consequently, this scenario further increased the demand for construction projects, followed by the need for heavy-duty equipment. As a result, contractors often query about popular heavy equipment models. For instance, they often query about the Hyundai 210 excavator price in India.
Now, getting back to the finance models, these are revolutionising the real estate sector. To illustrate, this approach brings together various stakeholders like developers, banks, and investors to create affordable housing solutions. From microfinance to crowdfunding, these models have transformed how people finance their homes.
Hence, this blog will discuss innovative financing models that make housing affordable for Indian citizens.
Making Housing Affordable with the Top 5 Finance Tools
Below listed are some of the breakthrough finance models that provide affordable housing to the Indian masses:
1. Microfinance
This is one of the major finance tools for affordable housing in India. This service provides loans to low-income households. This model is aimed towards families who often need access to the conventional banking system.
Moreover, this model operates on the concept of group lending. Simply put, the borrowers form a group and take responsibility for each other’s loan requirements.
Its success in India also encouraged MFIs- MicroFinance institutions to provide financial aid to millions of people. These people are the ones who either need funds to build or repair their houses. Hence, this model has made housing otherwise affordable.
2. Public-Private Partnerships
This is a joint venture between the private sector entities and government authorities. The partnership aims to fund, manage, and oversee public projects.
Now, in the context of affordable housing, these partnerships act as a major catalyst for pooling resources. Both govt and private sectors.
In other words, the government can help by providing land at a subsidised rate. On the contrary, private contractors or developers can construct and oversee affordable housing projects.
The government can provide land at subsidised rates, while private developers can construct and manage affordable housing units. PPPs have been used successfully in India, with many affordable housing projects being developed through this model.
3. Rent-to-Own
As the name suggests, this model allows tenants to rent land for a fixed period. Once the tenure ends, they can own the property after paying off the rent. Rent-to-own model is majorly beneficial for those who cannot afford the upfront purchasing cost of a house.
Moreover, it allows the occupants to move in immediately during the rental period. In fact, this model is gaining immense popularity among residents & contractors, with various developers offering different rent-to-own operations.
4. Cross-subsidization
This is yet another popular financing model for affordable housing in India. To illustrate, the developers, by raising the price of luxury housing, subsidise cheap housing units. The model is a success in various Indian cities.
To substantiate this, developers reserve a certain percentage of their projects for affordable housing units. Accordingly, they charge higher rates for the non-reserved units, which subsidises the cost of the affordable units.
5. Crowdfunding
This model includes a large number of people who contribute a significant amount of money for the overall project funding.
Crowdfunding acts as a great tool to raise funds for affordable housing. Additionally, this method is a total success, with various online platforms dedicated to fundraising for housing projects.
Talking about the statistics:
Finance has majorly streamlined the affordable housing industry. To substantiate, nearly 1.13 cr houses are already sanctioned, as per a report. Moreover, 50.18 lakh housing projects are completed.
Final Thoughts
So, these were some of the famous tools centred on facilitating affordable housing in India. Now that we have covered all the areas of our topics, let’s conclude whilst recollecting a few points.
In a country like India, affordable housing initially seemed impractical and challenging. However, with smart finance models, bridging the gap between demand and supply is now a big success.
This favourable scenario is hence also accelerating the production of heavy-duty and agriculture equipment.
This blog walked you through some popular financing tools for affordable housing. Moreover, the previous section’s models are practical and achievable.
Nevertheless, it’s important to continue the exploration of many such new and inventive models to accelerate the affordable housing operation.