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Shun ‘speed money’, focus on speed: Parekh to developers

12:45 AM Jun 01, 2019 | Free Press Journal Correspondant

New Delhi : Raising concern over high housing costs in the country, Housing Development Finance Corp Chairman Deepak Parekh said developers need to shun ‘speed money’ and focus only on speed in delivering projects to the customers.

Parekh also asked regulators to allow banks and housing finance companies to fund land transactions meant for residential purposes, while he sought immediate steps to fast-track numerous approvals required for such projects.

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 Praising the ‘Housing for All’ scheme, launched by Prime Minister Narendra Modi, Parekh said that the housing sector needs to get its pricing points right and the focus of developers needs to shift from luxury to affordable housing.

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Parekh pointed out that developers currently incur high costs of lending, at 18-24% interest for purchase of land, as they can’t approach banks or home finance companies. This leads to high-cost debt on developers’ books even before they can reach the construction stage and access debt from banks or home finance companies.

“The regulators now need to relax this near decade old restriction. The regulators should, within limits, permit banks and HFCs (housing finance companies) to fund land transactions–or at least land transactions that are acquired specifically for residential purposes,” Parekh said.

“This is a simple, doable solution. It will bring residential prices down, increase the stock of affordable housing and fulfil the aspirations of more Indians becoming homeowners. So the key question remains–will the regulators oblige?” he said.

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