‘Organise, regulate rental markets across the country’
Today, India is a country under construction. From building industrial nodes to smart cities, the mammoth workforce orchestrating this makeover demands an immediate switch in our housing policy much like the current government’s recent focus towards ‘Affordable Housing,’ a massive exigency for rental homes stares at the country.
HOUSING A STIGMA
A house in India meant much more than the shelter where people lived and raised their families.
It was perhaps the first box on a check list designed by the society to judge a person and today young professionals often feel the pressure of procuring a residential asset to start a family.
The trend became more prevalent since 2002 which saw a mortgage meltdown in India.
Home loan rates hit an historical low ( 6.75% was the lowest ever).
Today the pressure has snowballed into a massive stigma for a large section of young India unable to buy a house.
Worse, many of those who escaped the blemish have either found themselves engulfed in a debt trap or became prisoners of the city.
In today’s fiercely competitive times where job cuts are a rampant reality, the ‘wise’ decision to buy a house might not be the wisest anymore.
For many who look at residential real estate purely as an investment vehicle have also run out of steam.
The National Capital Region (NCR) is a case in point where values have eroded.
THE ELBOW ROOM FACTOR
The Economic Survey 2016-17 described India as the country on the move. It refers to the emergence of a free-wheeling generation averse to build their lives around a permanent fixture called ‘home’.
While the debate over living in an owned residence over rental properties could be unending certain benefits of the latter are undeniable. At the onset you could afford a rented house more than 2-3 three times the value of a property within your purchasing power. And, the value is not restricted to just the size or quality of the apartment. It pertains to other crucial yardsticks such as the social infrastructure, the time spent on commute and the difference in the overall quality of life.
Secondly, it could have a huge bearing on one’s career particularly in the existing times when opportunities come sans boundaries. A person in a rental accommodation is obviously more mobile as compared to someone tied down by equated monthly installments (EMIS).
The advantage assumes huge relevance considering a large section of the workforce running our metro cities belong to small towns. However, the acute shortage of rental housing in India and its unorganised structure continue to be natural pain points.
PROLONGED LACUNA
Despite the burning demand of rental properties there is no structure for this kind of accommodation in India. Unlike matured economies such as Singapore and Dubai our housing policy has failed to budget for the housing needs of scores of population migrating across the length and breadth of the country. That explains the massive slum population infesting our metros today. According to the National Sample Survey of 2012, 71% households living on tenanted apartments did not reflect on paper. On the other hand industry estimates show that approximately 11mn housing units lie vacant in India. While the burning demand of rental homes might not be enough to offset that number a strategic government policy could still bridge the demand-supply divide.
Worse, the pro-tenant Rent Control Act is probably the most draconian regulation of our times. The regulation that prohibits landlords to charge market rates and face long-suffering litigations to evict tenants played a major role in squeezing out market confidence in rent yielding development. However, the addition of the leave and licenses clause in the RCA act brought some reprieve for the landlords. Markets such as the Europe have a flourishing rental management business courtesy a flexible policy environment to evict defaulters and nurture investors including pension funds with healthy returns.
Ignorance towards planned rental housing could hound India in the near future. It is high time we come out of our slumber.