What Could Improve India's Rental Housing?

While a lot has been done to revive the real estate sector that has seen a tepid growth in the past two years, one aspects of the sector that has been completely overlooked is the country's rental stock. Despite the fact that they form a large part of the housing in India, till recently there has not been a guiding policy on this segment.

However, the government recently prepared a draft National Urban Rental Housing Policy (NURHP) . A model policy, the NURHP would encourage developers to implement housing projects meant to serve the rental needs of the people. Developers will be incentivised to initiate such projects. The government has been consulting various stakeholders to implement the policy in an effective manner.

A look at what all the government has done so far to promote rental housing in the country:

Urban Development Minister M Venkaiah Naidu has reportedly asked his ministry to promulgate innovative rental housing schemes, which can be replicated on a large scale and can reach to the poorest. States, along with urban-local authorities, will support the Centre in achieving this target. 

The Ministry of Housing & Urban Poverty Alleviation is expected to propose setting up of a dedicated fund to promote rental housing. 

The government is planning to set up rental management agencies for the maintenance of rental stocks. Perks in the form of tax exemptions, rebate in registration and licence fee could be provided to developers working through the public private partnership (PPP) model. 

The Real Estate Investment Trusts (REITs) are also expected to play a significant role in the development of rental housing for the people when they come into being. 

The Slum Rehabilitation Authority, the Maharashtra Housing and Development Authority and the Mumbai Metropolitan Region Development Authority have joined hands to launch rental housing projects in Maharashtra. Gujarat has also forwarded a proposal to the Central government for implementing such schemes.

What else can the government do?

There are institutional and financial barriers for the development of rental housing. The Centre, along with states and urban-local bodies, could focus on removing these hurdles first. 

A market-driven rental housing would be a better solution in the long run, as it would generate its own funds rather than depending on the government support. 

Many public sector undertakings (PSUs) provide accommodation to its employees. This model can be promoted and replicated in other places, too. 

Apart from housing the urban poor, the country's rental could be used as a social asset and could be used by the government emergency situations. A healthy rental housing would also help the government get rid of slums and irregular developments which are mushrooming across city peripheries. 

Countries such as Singapore have a vibrant rental housing market, where most industrial workers live in the houses with decent facilities near the industrial complexes. On the other hand, rental housing vouchers are popular in many countries, including the US. By replicating these models, the government will be able to house its urban poor better along with keeping a healthy rental stock.