Delhi's Affordable Housing Rules Redrawn: What the New FAR Norms Mean for Buyers and Builders

The Delhi Development Authority confirmed last week that it has amended Floor Area Ratio norms for Economically Weaker Section and Lower Income Group housing projects in 11 designated affordable zones across the capital, raising permissible FAR from 3.5 to 4.0 in areas including Narela, Bawana, and parts of the Rohini sub-city. The change, formally notified on June 28, 2026, takes effect immediately for new project applications.

The timing matters. Delhi is sitting on a shortage that independent analysts at the National Institute of Urban Affairs estimated at 870,000 dwelling units as recently as March 2026, with more than 70 percent of that deficit concentrated in the EWS and LIG categories. Land costs in the NCR have climbed without pause — average prices in South Delhi now brush INR 18,000–22,000 per square foot in established colonies — and the gap between what low-income households can afford and what the market supplies has not narrowed in any meaningful way for three years. The DDA's FAR revision is the most substantive planning intervention since the 2021 amendment to the Master Plan 2041 that first designated those 11 affordable priority zones.

Ground-Level Pressure in Narela and Rohini

In Narela, where the DDA itself has roughly 12,000 unsold EWS units sitting in various stages of completion, the new FAR headroom could change the project economics for private developers who have largely avoided the area. Construction costs in Narela currently hover around INR 1,800–2,200 per square foot for basic specifications. At a permissible FAR of 4.0 on a plot of 2,000 square metres, a developer can now theoretically add an extra floor of saleable units without increasing land acquisition costs — a shift that one financial model circulating among NCR developers reportedly pegs at an 8–11 percent improvement in project-level IRR. That margin is the difference, for many mid-sized builders, between a Narela project being viable and it remaining on the shelf.

Rohini Sector 36 and parts of Sector 34, both of which fall inside the affordable priority designation, are attracting fresh inquiry from builders who had pivoted almost entirely to the Dwarka Expressway corridor over the past four years. Land there trades at roughly INR 3,500–4,200 per square foot, about one-fifth the rate in south-west Delhi's more established pockets. The DDA's own Pradhan Mantri Awas Yojana-linked projects in Rohini — specifically the Phase II rollout of the DDA Housing Scheme 2024 — are now being re-evaluated for additional inventory under the revised norms, according to documents reviewed by The Daily Delhi.

What Builders and Buyers Should Watch

The policy revision has a catch. The enhanced FAR applies only to projects where at least 60 percent of total built-up area is designated for EWS or LIG units, priced at or below INR 15 lakh and INR 25 lakh respectively under the PMAY-U subsidy ceiling. Any developer attempting to cross-subsidise with free-sale market units beyond the 40 percent threshold loses access to the higher FAR — a clause the DDA says it will enforce through third-party audit tied to Occupation Certificate approval. Builders who mis-categorise units risk forfeiting the additional FAR post-construction, creating significant legal and financial exposure.

For buyers, the practical upshot is that the pipeline of sub-INR 20 lakh apartments in Narela and Bawana should expand over the next 24 to 36 months, assuming the construction finance environment cooperates. HDFC Bank and Punjab National Bank are both understood to be finalising dedicated construction loan products for DDA-partnered affordable projects, with disbursement linked to RERA registration milestones rather than traditional physical completion stages. First-time buyers registered on the DDA's online demand portal — which had 4.3 lakh active registrations as of May 2026 — will likely see a fresh draw by early 2027. Those waiting should update their documentation on the portal now; the DDA has indicated that allotments under the revised scheme will prioritise applicants whose records are verified and complete before the fourth quarter of this fiscal year.