 "Stilt plus 4 floors in Gurgaon: What Haryana's new policy means for buyers")
Gurgaon has seen a significant rise in housing prices in recent years. In fact, property prices of premium projects in New Gurugram are up by 53% in the last one year, said a report by Savills India. This has made buying a home a challenge for many residents. In an attempt to address this issue, the Haryana government has introduced a new policy allowing the construction of buildings with a stilt (ground floor used for parking) and four floors above it in residential sectors. But will this policy actually translate to more affordable housing options?
Real estate experts believe this policy change has the potential to benefit the Gurgaon housing market in three key ways:
Boosting Housing Supply: By allowing more floors per building, the policy could lead to a significant increase in the number of residential units constructed in Gurgaon. This increase in supply could help meet the existing demand for housing, which has been outpacing construction rates.
Stabilizing Prices: With more housing units available, the rapid rise in property prices in Gurgaon might slow down or even decrease. This would make buying a home more achievable for potential buyers who have been priced out of the market in recent years.
Enhanced Urban Living: With better infrastructure development (funded by developer contributions) and potentially more housing choices, the quality of life in Haryana's urban areas could improve.
"This is a significant development that boosts growth potential, meets market demand and provides crucial regulatory clarity for planning residential projects effectively. This decision allows developers to capitalise on increased floor area ratio, offering more units on the same land footprint while maintaining cost efficiency in construction." – Shveta Jain, Managing Director, Residential Services, Savills India.
Back in 2017, the Haryana government allowed buildings with four floors on top of a ground floor used for parking (stilt). This change was made to the state's building code. People could even buy and sell these fourth floors as separate homes.
But many residents weren't happy. They complained that these four-story buildings were causing problems:
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- They put a strain on things like water and sewage systems, which weren't built for so many people.
- They could damage houses next door.
- They made the roads inside neighborhoods too crowded with cars.
- Resident groups (RWAs) protested for a long time, and in February 2023, the government listened. They stopped allowing these four-floor buildings and formed a group of experts to study the issue. The new policy, just announced, is based on what this group of experts recommended.
But here is where it gets a bit more complex:
Pre-Approved Plots: This applies to sectors where the original layout plan already designated plots for four individual dwellings. These plots can now have buildings with stilt-plus-four floors.
Corner Plots with Wider Roads: This applies to plots located next to roads that are at least 10 meters wide. If the layout plan for these plots originally designated three dwellings, they can now be built with stilt-plus-four floors too. However, there's a crucial condition:
Mutual Consent Needed: The owner of this plot needs to get written permission from all the owners of neighboring plots before constructing a taller building. This is likely to ensure these taller buildings don't negatively impact neighboring properties in terms of light, ventilation, or aesthetics.
Affordable Housing Exemption:
Interestingly, the policy also applies to licensed Deen Dayal Upadhyay Jan Awas Yojana (DDJAY) colonies. These are government-backed initiatives that provide affordable housing for low-income groups in urban areas.
In cases where such buildings have been constructed without approval of building plans, violators can apply for composition of offence on payment of a penalty 10 times the rate prescribed for raising constructions without getting building plans approved.
“Unlike the permission granted earlier, this time, the construction of the fourth floor is subject to the fulfilment of certain provisions that include, among others, the capability of the existing infrastructure to bear the additional load,” said Rajjath Goel, managing director, MRG Group.
"After a 16-month ban, the Haryana govt has finally given a nod for construction of stilt plus four floors (S+4) in the residential areas where the layout plan for building four dwelling units per plot or accommodating density of 18 persons per plot stands approved. This gives respite to many because there were several constructed buildings where occupancy certificates were put on hold post the ban. These ready buildings were awaiting the approval. On a positive, there will be more new supply added in the market, particularly in Gurugram where housing demand has skyrocketed in the last few years,"said Santhosh Kumar, Vice Chairman - ANAROCK Group.
As per ANAROCK Research, the total available inventory in Gurugram as of June 2024-end stands at approximately 35,540 units, which is 37% less than the corresponding period in 2019. High demand in the city has helped developers reduce their unsold stock in the last five years.
Developers argue that independent floors offer a quicker return on investment compared to high-rise buildings.
Faster construction time: Building four separate floors might be quicker than constructing a single large building.
Easier sales: Selling individual floors might be easier than selling units in a high-rise, especially for smaller investors.
"The government's decision will have the dual benefit of enhancing independent floors with higher property valuations, while also opening the premium housing segment to higher quality development. The decision, based on expert committee recommendations, shows prudent forethought by the policy makers. With the reinstatement, developers will have the permit for constructions to accommodate either four dwelling units per plot or three dwelling units per plot, as and where where the design layout plans allow with adherence to specific dimensions to ensure adequate aeration and sunlight. Complying with the Haryana Building Code, this will be a win-win for both developers and the State Government as the funds from infrastructure augmentation will go a long way to bolster urban infrastructure. We are confident that the policy to reinstate the construction of stilt-plus-four floors in residential sector will help to increase housing stock and bolster premium quality residential development across Haryana," said Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd.
Santosh Agarwal, CFO and executive director of Alphacorp, said this policy meets the rising housing demands, particularly in urban areas like Panchkula and Gurugram. “It ensures efficient land use while upholding safety and compliance through rigorous conditions and expert panel reviews. Additionally, it supports the state’s vision for sustainable urban development, driving economic growth and improving living standards for residents. We believe this policy will pave the way for more innovative and sustainable housing solutions in the future,” he said.
"This policy change is expected to significantly boost the supply of builder floors, which are in high demand among homebuyers. The decision is also likely to Stabilise the rising property prices. Consequently, homebuyers stand to benefit from more options at lower prices, potentially more affordable & mid segment housing," said Aman Sarin, Director & Chief Executive Officer, Anant Raj Limited.
However, there are also potential challenges:
- Impact on Infrastructure: The policy hinges on sufficient infrastructure being in place to handle the additional population density.
- Developer Response: Whether developers prioritize affordable or premium housing options remains to be seen.
- Neighbour Consent Hurdle: Obtaining consent from all adjoining plot owners for taller buildings on corner plots could be a time-consuming process.
Residents' welfare associations (RWAs) are concerned about the strain on infrastructure like water supply and sewage systems. They also worry about increased traffic congestion and parking issues. Some experts believe the policy might benefit developers more than homebuyers, as it might encourage construction of high-end apartments rather than truly affordable housing.