Karnataka To Launch Affordable Housing Policy 2025, In Line With PMAY 2.0

On March 6, the Housing Department held a meeting with the Revenue Department, development commissioner, RGRHCL, UDD, HUDCO, the slum board and consultants to discuss key points. 

Funding Gets Tighter 

The policy aims are within reach, but money is tight. The Chief Minister's One Lakh Housing Scheme faces money troubles, with a predicted gap of Rs 3,700 crore due to the high per unit cost of Rs 11.2 lakh. This puts homes out of reach for many who could benefit. Also, banks shy away from backing affordable housing projects leaving builders and buyers in a tough spot. 

Experts say Karnataka's new policy should team up with PMAY 2.0 to gain more perks and cash help. Mukhtar Pasha, who heads the Revenue Department, said we need to get more private companies involved by cutting stamp duty and registration fees. "These high costs of deals hurt both builders and buyers," he told the group at the meeting.

Learning From Past Policies 

KAHP 2016 included many parts in its plan, like Beneficiary-Led Construction (BLC), In-Situ Slum Redevelopment (ISSR), Affordable Housing in Partnership (AHP), and Credit-Linked Subsidy Scheme (CLSS). 

The BLC model let families build their own homes with some help, but land bundling ISSR ran into many issues with getting land and fixing up old buildings. It's startling to see that by 2021, Karnataka had reached 17 per cent of its affordable housing goals, which shows we need bigger changes. 

Proposals and Discussion Points: 

The recent meeting with key people brought up several ideas and hot topics to look at. Here's a deep dive into the main points they talked about:

Affordable Housing Zones: The consultants proposed creating Affordable Housing Zones (AHZs) on properties owned by the government which are managed by KIABD (Karnataka Industrial Areas Development Board) and slum redevelopment boards. These zones are dedicated to affordable housing development through streamlined approval procedures and designated incentives.

The extent and nature of private sector participation in AHZs remains undefined. The National Capital Region Planning Board Bill was brought up by both zonal and metropolitan developers as a potential obstacle to profitable business operations in these zones. The urban planner stated that AHZs hold great promise when implemented correctly yet lack of defined private sector roles could make them fail.

Industry Responds to Stamp Duty and Registration Fee Exemptions: The most debated topic involved additional moderation of stamp duty and registration fee waivers for affordable housing projects which were initially offered in PMAY 1.0 and included in PMAY 2.0 without detailed explanation. 

The developers explained that waivers would play a crucial role in reducing transaction expenses and enabling the financing of projects. Mukhtar Pasha assured participants that waivers will be provided but apologised for the delay in issuing formal documents. According to CREDAI representatives the waivers serve as essential facilitators which actually enable private developers to work on affordable housing projects.

Limited Scope in Floor Area Ratio (FAR) Benefits: The Urban Development Department verified that government projects and Public-Private Partnership (PPP) initiatives will obtain an extra 50 per cent Floor Area Ratio (FAR) which serves as an important incentive for boosting project density. Private developers did not receive the benefit despite CREDAI's lobbying attempts.

The CREDAI representative stated during the meeting that affordable housing requires equivalent incentives for both public and private sectors. Exclusively granting FAR advantages to PPP projects reduces the extent of private sector involvement.

Divisive debate on Land Reservations: Land reservations for affordable housing sparked intense debate among stakeholders. While government agencies like RGRHCL have already reserved land for such projects, there is no clarity on whether private developers will be mandated to allocate portions of their land for affordable housing.

Voices ranged from zero reservations to mandatory allocations of upto 20 per cent. Private players argued that mandatory reservations could lead to financial strain on developers unless accompanied by adequate compensatory mechanisms like Transferable Development Rights (TDR). A technical consultation would be necessary. 

Single Window Clearance system, a work in progress: The Urban Development Department assured stakeholders that a Single Window Clearance system is under development to expedite project approvals across departments. However, there was little clarity on specific reforms or timelines.

CREDAI strongly advocated for a more contextually relevant system tailored to affordable housing needs. “Approval delays are one of the biggest bottlenecks we face,” said a CREDAI official at the meeting.

Infrastructure Status for Affordable Housing: CREDAI pushed for granting ‘infrastructure status’ to affordable housing projects — a move that could simplify regulatory approvals, reduce financing hurdles, and attract institutional investments. While government officials acknowledged the potential benefits of this proposal on AHPs, no firm commitments were made during the meeting. A smaller, more detailed meeting will follow for this. 

Awaiting clarity in Development Charges and Land Conversion Exemptions: The meeting confirmed that development charges and land conversion exemptions would continue under PMAY 2.0 but called for clearer guidelines from relevant departments to avoid confusion during implementation.

Incremental progress on Land Banks and PPP Models: Housing department agreed to proceed with land banking efforts for affordable housing projects but emphasized the need for follow-ups from the Revenue Department to ensure procedures were followed, right maps were used and timely implemented.

Configurations PPP models were also discussed as a viable option for scaling up affordable housing initiatives; however, stakeholders highlighted gaps in streamlining processes for such partnerships. Smaller, techno-institutitonal consultations will follow for these.

Addressing Project Delays: Despite extensive discussions on financing mechanisms and regulatory reforms, critical issues like project delays were not adequately addressed — a glaring omission given their impact on affordable housing completion and success rates.

“Streamlining project timelines should have been front-and-centre,” said an industry expert following the meeting. “Without addressing approval bottlenecks and operational inefficiencies, even well-funded policies risk falling short.”

Looking Ahead

As Karnataka prepares to launch its Affordable Housing Policy 2025, stakeholders remain cautiously optimistic about its potential impact while acknowledging lingering challenges in implementation and financing.

Chief Minister Siddaramaiah summed up his vision during budget discussions: “Affordable housing is not just about building homes; it’s about building futures.” Whether this ambitious policy can deliver on its promise will depend on how effectively it balances industry incentives with social welfare goals — and how swiftly it addresses structural bottlenecks that have plagued past initiatives.

For now, all eyes are on Karnataka as it takes decisive steps toward tackling one of its most pressing challenges: Ensuring every citizen has access to safe and affordable shelter while navigating complex regulatory landscapes and financial constraints inherent in the current environment.