There are a number of challenges facing affordable housing. High cost of land, which is the consequence of a number of factors, is one of the principal challenges. Financing the land is another major challenge that Developers/ Builders face in delivering affordable housing. The absence of a clear title is also a serious deterrent for participation by financial institutions and real estate developers in new as well as redevelopment projects of real estate. In the absence of redevelopment and densification of available lands, land remains underutilized - further contributing to shortage of land and to high land prices.

For any strategy to enhance the provisioning of affordable housing, therefore, government interventions through financial and non-financial support as well as through policy reforms would be critical. Financial subsidies, subsidies in kind (e.g. in the form of government land) as well as cross-subsidies will have to play a central role in addressing the problem of vast sections of India's population being unable to afford housing at market prices.

While the potential for directing privately owned land towards affordable housing at a low cost is limited, appropriate PPP structures can be used to incentivize the private sector in that direction. Strategies attempted include directing private land for affordable housing in exchange for permission for more intensive utilization of land or in exchange for permission to build high-end housing. PPP strategies including government grants and subsidies can also be potentially deployed to unlock unutilized/underutilized parcels of both government as well as privately owned lands for affordable housing.