First Tamil Nadu Housing Sector Strengthening Program Development Policy Loan

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The development objective of Tamil Nadu Housing Sector Strengthening Program Development Policy Loan aims to support the government of Tamil Nadu to increase the access to affordable housing by strengthening policy, institutions, and regulations of the housing sector. This program document presents a Development Policy Financing (DPF) for the government of Tamil Nadu (GoTN), the first in a series of two single-tranche programmatic DPFs. The reform program supported by this DPF stems from the strategic priorities set by the government of Tamil Nadu in its Vision 2023, taking into account lessons learned since its inception and from implementation of the PMAYU program. The programmatic DPF will address critical policy, regulatory, and institutional reforms needed to develop a well-functioning housing market and to enhance the access to affordable housing for the needs of low-income population. The policy, regulatory, and institutional changes supported under the DPF series will be introduced in a sequenced and phased manner, contextualized to the policy environment of the GoTN. The program of reforms supported by the proposed DPF series is structured in three interlinked pillars reflecting critical building blocks to increase access to affordable housing: (i) strengthening policies and institutions to support inclusive and efficient housing sector development, (ii) developing an enabling environment to increase the supply of affordable housing, and (iii) crowding private sector participation in affordable housing. The first pillar of strengthening policies and institutions supports the GoTN’s efforts to transform the housing sector from its current state-led model to a market model that enables the development of solutions for multiple needs and one that leverages private sector and beneficiary contributions towards increased access to housing. The second pillar of enabling environment focuses on unlocking regulatory barriers that will effectively increase the supply of affordable housing. The third pillar of crowding private sector participation supports the creation of a new institutional set-up to incentivize private sector participation in affordable housing.