De-Jargoned | Rental Housing

De-Jargoned | Rental Housing

To speed up the work on development of affordable housing in India, the government has decided to form a panel to review the stock and status of rental housing in India.

A government-owned residential property that is used for providing housing on affordable monthly rent to those who cannot afford to buy any property is called rental housing. Among developed countries, rental housing is often termed as social housing. The government can develop rental housing through various means. In India, rental housing is being developed through public-private partnership projects. Any developer applying for a tender for such a project gets land from the government at a cheaper rate. He then builds on it, operates it for some years and then hands it back to the government.

Rental housing in India is being developed only for the economically weaker section (EWS) and for those who cannot afford to buy a dwelling in metros.

At the beginning of the 11th Five-Year Plan period (2007-12), housing shortage in urban areas was around 24.71 million units, out of which 99% was in the EWS and low-income group categories, according to these estimates. Thus, rental housing is the answer to the ever-increasing housing demand.

Once rental housing becomes popular across cities, the new supply of housing will reduce the burden on cities that are already witnessing influx of migrant workforce in huge numbers. This will help developers in bringing down property rates in certain under-supplied and speculative markets such as the National Capital Region.

The biggest hurdle is non-availability of land near central areas. Rental housing projects enjoy certain benefits such as land required to build the project is made available at lower rates to developers. But the government has not been successful in providing the land at cheaper rates near central areas or even in the suburbs. Land that is available in some remote towns near the city cannot be used as it defeats the purpose of settling the workforce near its workplace.

In addition, developers are also not keen on taking up such projects as there is a very small profit margin for them. Moreover, the focus of the government is only on mega cities. Tier-II cities are not on the priority list of the government despite having similar problems as are prevalent in metro cities.

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