Gujarat: No takers of affordable apartments, RMC forced to cut prices


The Rajkot Municipal Corporation (RMC) decided on Monday to reduce the price of its affordable houses for the middle income group (MIG) category by 25% after failing to find buyers, despite multiple advertisements over the past two years. .

At its meeting held on Monday, the standing committee of the civic body approved a proposal by the Housing Programs Department to revise the price of a MIG apartment from Rs 24 lakh to Rs 18 lakh.

Over 1,200 3BHK apartments were part of the scheme launched in February 2020. On a carpet area of ​​60 square meters (m²), these apartments were priced at Rs 24 lakh apiece.

RMC had launched a first call for applications for these apartments in February 2020 but only obtained 834 responses. Of the 834 applicants, only 230 were deemed valid; therefore, only 230 apartments could be allocated to eligible beneficiaries in August of the same year.

In January 2021, the RMC conducted another lottery and another 210 of the 834 applicants were allocated apartments after providing the required documents. However, around 30 of the 440 beneficiaries returned their apartments later, city officials said, due to financial constraints due to Covid-19 or after finding an apartment in other government programs. This left RMC with an inventory of 847 unsold MIG apartments.

The civic body made a third attempt to sell the apartments in April last year inviting applications, but only got 124 responses, despite three deadline extensions. Only 59 of them actually accepted these apartments.

By conducting three draws, RMC managed to allocate 499 apartments out of a total of 1,268. But only 293 of the 499 actually accepted the allocation and paid their installments to the civic body while the others returned their homes. .

A total of 975 or nearly 76% of homes are unsold so far, city officials said.

Rajkot City Commissioner Amit Arora said the price reduction was justified by the poor response to the price of Rs 24 lakh. “We were unable to sell these apartments despite three attempts. These houses are getting old and we have to sell them. Therefore, we have proposed that the price be brought down to Rs 18 lakh,” Arora told The Indian Express, adding, “These MIG apartments were built by RMC without any input from the state or central government. Moreover, the guidelines (of Mukhya Mantri Gruh Yojana) only prescribes the upper ceiling of Rs 24 lakh as the price for an apartment of this category and we had adopted this as the default price for these apartments. However, there is no lowest price provision. Therefore, RMC is free to set the price of these apartments.

MIG apartments are under construction at Viman Nagar Main Road near Prem Mandir, at Jai Bhim Nagar near Jaddu’s Food Field on Kalawad Road, near Sheetal Park on 150ft Ring Road and near Selenium Heights on Mavdi-Pal Road. City officials said the total cost of constructing these 1,268 housing units (DU) is Rs 238.41 crore. All of these apartments will be ready for handover to beneficiaries by the end of May, city officials said.

The municipal commissioner insisted that RMC is not at risk of incurring losses by price reduction. “Depending on the location, the cost to build these DUs in MIG towers is in the range of Rs 13 lakh to Rs 15 lakh. So we don’t lose anything,” Arora said.

Standing committee chairman Pushkar Patel said the civic body must unload these apartments. “These are affordable houses. If left unoccupied, they serve no purpose and age. Therefore, they must be awarded to people even by reducing the price. The purpose of constructing these apartments was to provide housing for people under the Housing for Any Government initiative. Generating revenue from this program is not RMC’s objective,” Patel said, adding, “The price reduction will be applicable to apartments that have already been allocated and we will credit refunds to beneficiaries’ bank accounts. to maintain parity.

Arora said the revised price was decided after considering various factors such as unit construction cost and some surveys.

However, city officials said the Rs 24 lakh price tag proved unattractive compared to other affordable housing schemes. “The 2BHK apartments in the middle income group category cost Rs 12 lakh apiece and each had a carpeted area of ​​50 sqm. In the MIG apartments, one received an additional carpet surface of 10 m² but at a double price. This difference made MIG apartments unattractive. It is no wonder that all 1,286 LIG flats have been taken, while MIG flats find no buyers at the price of Rs 24 lakh,” a municipal officer said.

Incidentally, RMC has built over 18,000 affordable houses under the Pradhan Mantri Awas Yojana (PMAY) and the Mukhya Mantri Gruh Yojana and allocated to the beneficiaries. “This is the first time that an RMC housing program has not found takers. Therefore, we had no choice but to reduce the price,” said another municipal officer.

The central and state governments each provide a grant of Rs 1.5 lakh to urban local bodies (ULBs) like RMC for the construction of affordable houses for the economically weaker categories of Section I (EWS-I) and EWS- II. LIG apartments are eligible for Rs 1.5 lakh contribution from the state government only, but MIG apartments must be fully funded by ULBs and beneficiaries.

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