Stilt plus 4 floors in Gurgaon: What new Haryana policy means for buyers

In recent years, property prices in Gurgaon have seen a significant increase. In fact, property prices in premium projects in New Gurugram have gone up by 53% in the last one year, as per a report by Savills India. This has made buying a home a challenge for many residents. In a bid to address this issue, the Haryana government has introduced a new policy allowing construction of buildings on stilts (ground floor used as parking) and four floors above it in residential sectors. But will this policy actually translate into more affordable housing options?

Real estate experts believe that this policy change could benefit the real estate market in Gurgaon in three key ways:

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Increasing the supply of housing: By allowing more floors in a building, this policy could lead to a significant increase in the number of residential units being built in Gurgaon. This increase in supply could help meet the existing demand for housing, which is outpacing the pace of construction.

Price stabilization: With more housing units available, the rapid growth in Gurgaon property prices could slow or even decline. This would make buying a home more affordable for potential buyers who have been priced out of the market in recent years.

Improved City Life: With better infrastructure development (funded by developers) and potentially more housing choices, the quality of life in urban areas of Haryana could improve.

“This is a significant development that enhances growth potential, meets market demand and provides crucial regulatory clarity for efficient planning of residential projects. This decision allows developers to leverage increased floor area ratio by offering more units in the same land area while maintaining cost efficiency in construction.” – Shveta Jain, Managing Director, Residential Services, Savills India

In 2017, the Haryana government allowed buildings with four floors on the ground floor to serve as parking (on stilts). This change was made in the state building code. People could even buy and sell these fourth floors as separate houses.

But many residents were not happy. They complained that these four-story buildings were causing problems:

They put a strain on things like water and sewage systems that were not designed to handle such large numbers of people.
They can damage neighboring houses.
They have caused the roads within the estates to become too congested with cars.
Residents’ groups (RWAs) have been protesting for a long time and in February 2023, the government listened to them. They stopped allowing these four-storey buildings and formed an expert group to look into the issue. The new policy, just announced, is based on the recommendations of this expert group.

But here’s where it gets more complicated:

Pre-approved plots: This applies to sectors where the original layout plan already designated plots for four individual houses. These plots can now accommodate buildings with stilts plus four floors.

Corner plots with wider roads: This applies to plots located on roads with a width of at least 10 meters. If the development plan for these plots originally provided for three residential buildings, they can now also be built on stilts plus four floors. However, there is a key condition:

Mutual consent is needed: The owner of this plot must obtain written consent from all adjacent plot owners before constructing a taller building. This will likely ensure that these taller buildings do not adversely affect neighboring properties in terms of light, ventilation, or aesthetics.

Exemption from the obligation to provide affordable housing:

Interestingly, the policy also applies to licensed colonies under the Deen Dayal Upadhyay Jan Awas Yojana (DDJAY). These are government-backed initiatives that provide affordable housing to low-income groups in urban areas.

In cases where such buildings were constructed without approval of building plans, the perpetrators may apply for an arrangement with creditors and pay a fine of 10 times the rate provided for erecting structures without approval of building plans.

“Unlike the permission granted earlier, this time the construction of the fourth floor is subject to certain conditions which include the ability of the existing infrastructure to withstand the additional load,” said Rajjath Goel, Managing Director, MRG Group.

“After a 16-month ban, the Haryana government has finally given the green light to construction of stilt plus four storey (S+4) buildings in residential areas where a plan for four dwelling units per plot or a density of 18 people per plot has been approved. This has given respite to many as the issuance of occupancy certificates for several constructed buildings was suspended after the ban. These completed buildings were awaiting approval. The positive side is that more new apartments will come into the market, especially in Gurugram where the demand for apartments has seen a sharp increase in the last few years,” said Santhosh Kumar, Vice President, ANAROCK Group.

According to ANAROCK Research, the total available supply in Gurugram from June 2024 till the end of the year was around 35,540 units, down 37% compared to the same period in 2019. The strong demand in the city has helped developers reduce unsold inventory over the last five years.

Developers claim that independent floors provide a faster return on investment compared to high-rise buildings.

Shorter construction time: Building four separate floors can be faster than building one large building.

Easier selling: Selling individual floors can be easier than selling apartments in a high-rise building, especially for smaller investors.

“The government’s decision will have the dual benefit of increasing the number of independent floors due to higher property valuations and also opening up the premium housing segment for higher quality development. The decision, based on the recommendations of the expert committee, demonstrates the prudent foresight of the decision-makers. With this reinstatement, developers will be allowed to construct four or three residential units per plot, if and where permitted by the design layout plans, with specified dimensions to ensure adequate ventilation and sunlight. As per the Haryana Building Code, this will be beneficial to both the developers and the state government as the funds from the infrastructure development will go a long way in strengthening the city’s infrastructure. We are confident that the policy of reintroduction of stilt plus four floors in the residential sector will help in increasing the housing stock and enhance the development of premium housing across the state of Haryana,” said Pradeep Aggarwal, Founder and Chairman, Signature Global (India) Ltd.

Santosh Agarwal, Chief Financial Officer and Executive Director, Alphacorp, said the policy will meet the growing demand for housing, especially in urban areas like Panchkula and Gurugram. “It ensures efficient use of land while maintaining safety and compliance through stringent conditions and expert panel reviews. It also supports the state’s vision of sustainable urban development, driving economic growth and improving the living standards of its residents. We believe that 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 increase the supply of flooring, which is in high demand among home buyers. This decision is also likely to stabilise the rising property prices. As a result, home buyers will have more options at lower prices, potentially more affordable and in the mid-market segment,” said Aman Sarin, Director & CEO, Anant Raj Limited.

However, there are also potential challenges:

Impact on infrastructure: This policy is based on the assumption that infrastructure will be sufficient to cope with increased population density.
Developer response: The question remains whether developers will prioritize affordable or luxury housing options.
Obstacle in the form of neighbor’s consent: Obtaining consent from all adjacent plot owners to construct taller buildings on corner plots can be a time-consuming process.

Resident Welfare Associations (RWAs) are concerned about the strain on infrastructure such as water and sewage systems. They are also concerned about increased traffic and parking problems. Some experts believe the policy could benefit developers more than homebuyers, as it could encourage the construction of luxury apartments rather than truly affordable housing.