Rental Housing Needs A Shot In The Arm

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The rental housing economy in our country can fix a lot of our housing woes in a jiffy, simply by unlocking existing resources. 

Context, Please.

Per a new report, more than 11 million sold homes have remained unoccupied out of the total 110.14 million homes in urban India. 

Elementary thinking will tell you that using the existing unoccupied sold stock for rental accommodation can go a long way in addressing India's housing shortage. 

The Direction Is Right

To signal its intent, the government has so far launched the Affordable Rental Housing Complex (ARHC) scheme and also brought the Model Tenancy Act, 2021.

The model Act aims to overhaul the legal framework surrounding the rental housing market, enabling the formalisation of the segment - by creating a rent authority to provide a speedy dispute adjudication mechanism for the landlord-tenant ecosystem. 

But There Is A Lack Of Thrust

• To unlock the potential of millions of ready to move in homes, the central agency needs to ensure that states amend their existing acts or enact a new policy, without diluting the essence of the model guidelines - a task that could make even the brave, perspire. 
• Then, the timeline for certain dispute resolutions needs to be specified in the model Act, like disputes on withholding essential services, revision of rent and contraventions by property managers. 
• While the bar on eviction has been removed by the act, the process remains as restrictive as before: eviction can be carried out only on limited grounds, and that too after taking permission from the rent court.

And A Need For Incentives

India is at the lower spectrum of gross rental yields from housing, with investors historically relying on property value escalation for financial returns in the long term. 

Incentives in the form of exempting property tax for an initial predefined period, allowing additional low-cost FSI for rental housing, encouraging PPP (public-private partnership) participation, facilitating ease of capital for build- to-lease and rent-to-own residential projects, the report suggests.