A bet­ter fu­ture for rental mar­ket

In­no­va­tive schemes, use of va­cant homes, PPP model rec­om­mended in draft Rental Hous­ing Pol­icy

HT Estates - - FRONT PAGE - Van­dana Ram­nani

Many peo­ple in­vest­ing their hard­earned money in a house hes­i­tate t o rent i t out. Fear­ing that their ten­ants would ei­ther de­fault on rent pay­ment or not va­cate the house, they pre­fer to sit back in­stead and wait for prices on the prop­erty to ap­pre­ci­ate. Low re­turns on rentals are a prob­lem too, with 1.4% re­turns on res­i­den­tial prop­erty con­trast­ing sharply with 6% to 7% re­turns on com­mer­cial prop­er­ties.

The draft Na­tional Ur­ban Rental Hous­ing Pol­icy re­port re­leased last month seeks to ad­dress all rental mar­ket issues. It ac­knowl­edges that 11.09 mil­lion houses are va­cant in ur­ban ar­eas as per Cen­sus 2011 and sug­gests that if th­ese are made avail­able for rental hous­ing, the ur­ban hous­ing short­age is­sue could be largely sorted out.

Real es­tate ex­perts are of the view that the gap be­tween va­cant hous­ing stock and ac­tual hous­ing re­quire­ments needs to be bridged, a task which can be ac­com­plished by draw­ing up an in­ven­tory of empty houses. Amit Bhatt of Em­barq In­dia sug­gests that the gov­ern­ment could con­sider the Sin­ga­pore model of pro­vid­ing hous­ing to peo­ple for a fixed ten­ure, get­ting the gov­ern­ment to take over the units later to con­sider their re­de­vel­op­ment po­ten­tial.

“The new draft pol­icy seeks to ad­dress some of the fears land­lords have but it re­mains to be seen how it gets im­ple­mented,” says Su­nil Tyagi of Zeus Law, a law firm.

The draft pro­poses rental hous­ing mod­els such as PPP and schemes such as rent to own, shared ownership, rental

voucher and rent alt al al­lowance al­lowance. It also pro­poses in­come tax con­ces­sions for in­sti­tu­tional own­ers to cre­ate mass rental, es­pe­cially af­ford­able, hous­ing.

“The pol­icy is ex­pected to en­able for­mal­i­sa­tion of rental hous­ing through reg­u­la­tory and le­gal frame­works; en­hance fund flows along with in­cen­tives for rental hous­ing; and pro­mote in­sti­tu­tions/or­gan­i­sa­tions for con­struct­ing, managing, main­te­nance and op­er­a­tions of rental hous­ing stock, thereby help­ing achieve the goals of Hous­ing for All by 20222022. The draft pol­icy has called for de­vel­op­ing a strat­egy to deal with the va­cant or locked prop­er­ties in con­sul­ta­tions with var­i­ous stake­hold­ers and come up with op­tions,” says Dr De­bolina Kundu, as­so­ciate pro­fes­sor at the Na­tional In­sti­tute of Ur­ban Af­fairs (NIUA).

The draft pro­poses bring­ing in rental man­age­ment com­pa­nies to en­sure ef­fi­ciency in op­er­a­tions, main­te­nance and man­age­ment of large scale rental hous­ing projects/schemes.

Ac­cord­ing to Kundu, his- tor­i­cal­ly­tor­i­cally, hous­ing pol­icy and prog ramme i nter­ven­tions have been ori­ented to­wards pro­mot­ing ownership hous­ing. The share of house­holds living in rented ac­com­mo­da­tion was re­ported at 27.5% in 2011. This share was over 50% in 1971. Rental hous­ing in In­dia has re­ported a de­cline over the decades.

The hous­ing short­age will be ad­dressed by bring­ing in more hous­ing stock for var­i­ous in­come cat­e­gories that can­not af­ford or plan to buy prop­erty.

Also Also, the gov er nm gov­ern­ment role has shifted from provider to fa­cil­i­ta­tor, which is why the PPP route has been mooted as the gov­ern­ment can­not on its own meet hous­ing re­quire­ments.

The Cen­tre, states and lo­cal gov­ern­ments are likely to give direct and in­di­rect tax re­lief to house own­ers and ten­ants. This has been pro­posed as rent­ing of homes is a “com­mer­cial” ac­tiv­ity, which means in­creased prop­erty tax for in­di­vid­u­als and ser­vice taxes for in­sti­tu­tional rental hous­ing op­er­a­tors of hos­tels/PGs and dor­mi­to­ries wherein elec­tric­ity and util­ity rates are cal­cu­lated at par with com­mer­cial prop­er­ties, re­duc­ing the rental yield.

The doc­u­ment has sug­gested dif­fer­ent “need- based rental hous­ing” mod­els to ad­dress di­verse hous­ing needs for var­i­ous seg­ments of the pop­u­la­tion such as stu­dents, work­ing men/ women, con­struc­tion work­ers and mi­grants. Th­ese can be owned by in­di­vid­u­als, private play­ers, com­pa­nies and gov­ern­ment.

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