The government must take measures to improve the financial viability of rental housing projects, such as exemption from property tax for a predefined period and the ease of capital for development, according to real estate consultant CBRE. In his report “The Advent of Rental Housing in India”, the consultant said that more than 11 million units sold went unoccupied out of a total of 110.14 million houses in urban India and that the release of the stock of Existing unoccupied rental homes can go a long way in remedying the housing shortage in India.
“… a shift in demographics, socio-economic trends and consumer needs are fueling demand for rental housing; large-scale reverse migration of workers due to COVID-19 has also reinforced the need for housing options affordable rentals, ”the report says. .
To unlock the potential of the rental housing segment, CBRE said the government had already launched an Affordable Rental Housing Complex (ARHC) program and also introduced the Model Tenancy Act, 2021, but felt that “much more remains to be done. To do”.
The model law, which has been circulated to states for implementation, aims to overhaul the legal framework surrounding the rental housing market, thereby institutionalizing the segment by creating a Rent Authority to provide a rapid dispute resolution mechanism, according to the report.
CBRE noted that there are some loopholes in the model law that need to be addressed. Creating a robust rental housing market would require additional measures, including the enactment of a rental housing policy, he advised.
In his report, the consultant gave 11 recommendations for the growth of the rental housing market in India.
“The implementation of the Model Tenancy Act would be key, as housing is a matter of state. The Center must ensure that states change their existing laws or adopt a new policy, without diluting the essence of the central guidelines. “, did he declare.
Stating that certain provisions of the law require more attention, CBRE pointed out that the model law left several terms undefined such as “uninhabitable”, “prejudicial to the interests of the owner” and “for immoral purposes”.
“The timetable for resolving certain disputes must be specified in law. These include disputes relating to the withholding of essential services, the review of rents and fines by property managers,” the report said.
The deadline for resolving certain disputes should be specified in the model law. These include disputes over withholding essential services, review of rents and fines by property managers.
“While the ban on deportation has been removed by law, the process remains as restrictive as before: deportation can only be carried out on limited grounds, and that too after obtaining permission from the court of rents. “
In addition to the need to revisit certain provisions of the Model Law, CBRE said it was important that certain measures be taken at the structural / political level to ensure that rental housing can thrive in the country.
“India sits in the lower end of gross rental yields, with most investors historically relying on escalating house prices for financial returns. Therefore, there is a need to take measures that improve the financial sustainability of rental housing projects in India, ”said the consultant.
Measures could range from exemption from property tax for an initial predefined period, to granting an additional low-cost ISP for rental housing, to encouraging participation in PPP (public-private partnership) for the development of rental housing on public land, to the capital facility for construction to residential rental and rental projects with option to buy, etc.
“The Model Tenancy Act will be a game-changer for the Indian rental housing segment. The law is expected to encourage private participation and help monetize vacant rental stock by instilling confidence in the landlord-tenant relationship, in addition to provide a speedy dispute resolution mechanism We further expect the law to have far-reaching implications on the formalization of the housing market in India, ”said Anshuman Magazine, President, India and South East Asia , Middle East and Africa, CBRE.
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