Buying a house in Mumbai is a criminal waste of money: Sachin Ahir

Mar 13, 2013, 06:22 IST | Varun Singh

In a freewheeling discussion with Varun Singh, Sachin Ahir admits he feels the same pinch as the common man when it comes to buying a home in the city

Buying a house in Mumbai is so cruel a joke on the common man that not even the housing minister is spared the punch.

Sachin Ahir

Ludicrously out of range of the salaried classes living on the straight and the narrow, the prospect is daunting even for Sachin Ahir, Maharashtra housing minister, who claims he can’t afford one on his own in Worli, where he stays at present. The minister thinks it’s a criminal waste to spend so much of money for a home.

MiD DAY caught up with Ahir over a ride from Nariman Point to Worli. Passing by some of the priciest skyscrapers in the country, the course of conversation flowed from affordable housing to cheating builders, floor-space index and other realty issues, including the redevelopment of one of the largest slums in the continent.

Excerpts from the conversation:

MiD DAY: Being the state housing minister, can you afford a house in Mumbai?
Ahir: Today, if I plan to buy a bigger space in Worli, where I currently stay, I won’t be able to buy a house. It’s not possible even for me. Initially where I used to stay, the prices were around Rs 4,000 per square foot, and they have now shot up to anywhere between Rs 40,000-50,000. It’s a criminal waste, and even I feel the pinch. Then there’s this new trend of built-up and super built-up, so what area I pay for and what I get are two different things.

Sachin Ahir
Sachin Ahir says that in a changing scenario where the demand for houses is slowly dipping and the supply is on the rise, builders need to come up with a strategy to bring down prices. Pics/Sayed Sameer Abedi

MD: But all builders sell only on the basis of super built-up area, whereas the rule says they have to sell only on carpet area. We have been hearing about the government’s plans to curb this, but why is no action initiated against builders who don’t sell on carpet area?
A: We are doing our best but what can we do. Jab miya biwi razi toh kya karega kazi. People don’t come out and inform the government that they aren’t being sold on carpet because everyone has their needs and they live according to them. But the government has come up with different steps. For example, we have asked the BMC to pass building proposals only on carpet. Secondly, we are bringing in an amendment for which we have spoken to the revenue department that they shouldn’t register any flats unless the carpet area plans are passed. This will automatically solve the issue. Apart from this, in the new Maharashtra Housing Authority Act, 2012, we have a particular stand where every builder will have to mention on the agreement the carpet, built-up and super built-up, even car parking. This will give clarity to the homebuyer.

MD: Builders claim that stocks are available and they aren’t able to sell them. So why aren’t the realty prices going down?
A: Talking about private developers, the drop (in sales) is for two reasons. People are expecting the prices to go down in the coming days. Second, homebuyers lack confidence that the projects would be complete because there’s this perception that the process (building proposal) has slowed down and proposals aren’t being passed. But let me put it firmly. The market perception is being artificially created by some developers that policies are being changed when no policy has changed. Instead there have been amendments that have helped the industry, like increase in FSI in suburbs and other sections including the parking FSI. There’s no doubt that we have become a bit stringent with passing proposals, and yes, restrictions are there, but there’s no blanket closure. However, several people who used to get 100 per cent profit are now getting only 80 per cent, and in the greed for the 20 per cent, they are spreading the rumour that there’s nothing happening, no proposals are being passed, and this is not good. This has affected builder’s credibility.
However, as the demand is slowly going down and the supply increasing, the developer has to come up with a strategy, as there’s a need for drastic correction in the prices.

MD: But don’t you think the builder lobby is powerful enough to influence the government?
A: I don’t think so, not at this stage. It was, but not now. Initially, there was this perception within the (housing) industry that builders can decide policy, which hurt the government. But these were a handful of builders who used to say that. The whole industry shouldn’t be blamed for it. We should listen to them and understand the problems they face, but as one group, not on an individual basis.

MD: Redevelopment was the buzz but it didn’t bring the expected changes. The same goes for slum redevelopment. Where did things go wrong?
A: It went wrong when we brought in 70 per cent consent to the equation. We let the people decide. The developers and corporates shut their eyes to slum redevelopment. They didn’t want slum projects, they believed that these were not up to their standard and stayed away. They wanted open field projects. This made space for small developers. Hence I say that in Mumbai everyone is a developer, from a cloth merchant to a scrap dealer to an oil vendor or a car seller, because it was just that one had to appoint an architect, get 70 per cent consent and start redevelopment. Our policies weren’t stringent. We didn’t check the credibility of the builders. Whoever came with 70 per cent consent we gave them the go-ahead. But we are stopping that now. We will form a committee to scrutinise the builder’s credibility.

MD: Dharavi is still stuck. Will anything happen there ever?
A: This is my personal opinion, and it’s different from the government’s. We gave too much importance to Dharavi. We took it to the national and international level, and a project, which could have been undertaken under the existing rules of cluster development, became so huge that nothing happened. Currently, the status is that we can neither praise Dharavi nor put it down. The chief minister decided that Dharavi should be divided in small clusters and should be redeveloped.

MD: The Maharashtra Housing And Development Authority is the only housing authority in Mumbai but it doesn’t even meet 0.5 per cent of housing requirements. Where’s MHADA failing?
A: MHADA couldn’t protect its land which got encroached. We have stated that it should get the land back and develop it on its own. I am happy to announce that MHADA is now developing nearly 15 plots under the slum rehabilitation scheme. It could have played a vital role in decongesting Mumbai but then it didn’t happen. So we saw that Thane, Mira Road and many other places went out of our hand into private hands, unlike the case with CIDCO which developed a complete township Navi Mumbai. However, we are now accepting only housing stock and not money as premium from redevelopment and we are expecting 15,000 houses to be constructed in the coming years.

MD: Politicians are turning into builders. What do you have to say about it?
A: If politicians are turning into builders and doing good they are welcome. But if they aren’t doing things as per procedure it’s a worrying point and it would dilute their own credibility.

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