Government to focus on low cost rental housing
In view of the ever increasing housing shortage in cities and towns, the Union Ministry for Housing & Poverty Alleviation has decided to set up a high-level committee to recommend policy interventions to facilitate creation of rental housing stocks to cater to those who cannot afford to buy houses. The decision comes after several rounds of representation by the industry bodies, CREDAI & NAREDCO.
The housing shortage in India at present stands at around 27 million units, and estimates suggest that at least 50% is ascribed to people who cannot afford to own a house. The crunch has raised alarm bells in the ministry, which is trying to address the shortfall, especially in the Economically Weaker Sections (EWS) and Low-Income Group (LIG) category.
It has realized the need for promotion of rental housing for those who do not have paying capacity amid the spiraling realty prices. “The ministry is planning to set up a panel to suggest policy measures to make rental housing more lucrative,” a ministry official confirmed to Track2Realty requesting anonymity.
The ministry is aware that most of the private builders and developers are not all that enthused with the concept, considering that the returns on selling a property are much higher than on renting it.
Private builders blame lack of incentives and low returns for the lack of interest in creation of rental housing. Even the archaic rent control laws are discouraging developers to come forward.
“The existing policies, restrictive rent control laws, low rental returns and lack of incentives are major stumbling blocks in developing an organized rental market,” says the official.
Knight Frank India Chairman, Pranay Vakil believes laws have to be framed with strict compliance if rental housing has to succeed in India. “No developer or investor would risk his investment if laws are flexible for the tenant to occupy the house for years without the consent of the owner,” says Vakil.
The committee is expected to suggest the business model for rental housing stock to ensure that developers as well as those who would manage rental homes can earn profit.
Housing Minister Kumari Selja had asked private builders and developers to focus on affordable rental housing, considering that the land acquisition has become one of the biggest constraints in urban India.
The real estate developers have also been asked to come up with innovative ideas on rental housing as an option for economically weaker sections in urban areas who cannot afford to buy houses.