Being the second largest population all over the world, briskly edging towards the number one position; housing shortage has become the most noticeable concern for urban India. India faces a shortage of around twenty million units, of which economically weaker section (EWS) and low income group (LIG) constitute more than ninety five percent. With a mammoth figure to cater, Ministry of Housing and Urban Poverty Alleviation (MoHUPA) came up with a draft supporting rental housing as one of the viable option. ‘National Urban Rental Housing Policy (2015)’ focusses on creating adequate rental housing stock for the masses. It advocates social rental housing; facilitating shelter to those who fail to pay the market rent; and need based rental housing, targeting groups who can pay a certain amount of monthly rent.
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The draft provides fiscal and non-fiscal incentives to the tenants such as tax exemptions and housing vouchers enabling income tax concessions. Remarkably the policy facilitates modifications in legal and regulatory mechanism of Lease/Rent agreement, building permissions and also encourages adoption of the Model Tenancy Act, 2015. It also stimulates residential investments and public private partnerships; allocating specific percentage of dwelling units for social/need based rental housing for all housing schemes. The draft further propagates incorporating strategies for fast arbitration of rental property disputes and creating online portals for rental housing stock database.
While the draft intent is laudable, it holds ambiguity on its implementation and viability. With corporate Real Estate Investment Trust (REIT) providing lower yields in India, it is doubtful that residential REITs will be viable in the present scenario. The policy on one hand encourages faster implementations and private participations, but forgets to consider crucial factors such as growing unavailability of land and sky rocketing land prices. Though the first sketch seems to be in the right direction, it still needs to address various factors majorly at implementation and adoption stages. Confronting the enormous shortage for a rising population like India; it seems the government still has a lot more work to do.
About the author
Surabhi Arora, leads the research team in India and has more than 13 years of experience in carrying out multi-disciplinary research and analysis in the area of finance and real estate industry. Surabhi specialises in real estate economics, policies, commercial and residential real estate research with in-depth knowledge of market dynamics across major markets in India.