Active Stocks
Wed Jun 26 2024 15:55:13
  1. Tata Steel share price
  2. 172.55 -1.79%
  1. Reliance Industries share price
  2. 3,027.40 4.09%
  1. Bharti Airtel share price
  2. 1,458.55 3.07%
  1. State Bank Of India share price
  2. 845.05 0.38%
  1. ICICI Bank share price
  2. 1,218.25 1.60%
Business News/ Opinion / Online Views/  Pune Newsletter | The case for building rental housing

Pune Newsletter | The case for building rental housing

There is a wide spectrum of economic classes which need housing which they need not own

Worldwide, rental housing accounts for roughly a quarter of the total housing pool. Photo: ()Premium
Worldwide, rental housing accounts for roughly a quarter of the total housing pool. Photo:

Rental housing, as transit homes for workers who come to a city in search of livelihood, seems to solve so many issues, including that of slums, in one go, that one wonders why it hasn’t been adopted by the local civic authorities of major metros across the country.

Take the case of Pune, a metro by most definitions except that it is not a state capital (all the others are), where slums account for 32.4% of the total population of the city while occupying 2.34% of the city’s land, at 2001 Census figures, according to data collated by Maharashtra Social Housing and Action League (Mashal), a non-governmental organization (NGO) and published in the ‘Pune City Slum Atlas’ last year. Packed together, with little or no access to civic services, these are the people who are expected to fend for themselves as they help their better off brethren live in clean homes, drive their cars, tend to their children and gardens or cook.

As one developer, Hemant Naiknavare, director of Naiknavare Developers Pvt. Ltd, pointed out, “Slums are affordable housing for a certain segment of society with cost of land and cost of construction as low as can be. Rental housing is a transit accommodation and dharamshalas or dormitories can be built for this segment."

Worldwide, rental housing accounts for roughly a quarter of the total housing pool. Different models have been devised by countries to address this issue. After all, the person who washes the car or the construction site worker is not looking at owning property at his current level of earnings.

It is not just this economically weaker section that needs rental accommodation. Look at students, and Pune is a city of students, with its large number of educational institutions which contribute enormously to its economy. They, too, need housing in the form of hostels.

Every major city attracts people from other cities, say for their first job. These young professionals don’t immediately buy a home in the city: they stay on rent, if they can find it. A significant number of these people will move on to another city another job another rental home, but those who stay on might consider buying a home.

All of this indicates that there is a wide spectrum of economic classes, ranging from the lower-income group to the mid-income group (or, in bureaucratese, LIG and MIG) who need housing which they need not own.

“The bottom 20% population in any Indian city cannot afford to own a home: and they aren’t even looking at ownership," Naiknavare said.

In this context, there is a Mexican model under which a separate body, called Infonavith, has been created specifically to build housing stock. The body has been created out of provident fund money and it runs affordable housing, first identifying new housing needs. Developers who either have an existing land bank or who buy land based on the needs identified by Infonavith, build that housing. This is done without having customers and the developer is not paid till allotment, when he recovers his investment

There is another solution offered, to create a rental housing complex where there are some dormitories, preferably on the lower floors and single (or family) rooms on the upper floors, which will include a kitchenette and a walled off ‘mori’, the total not exceeding 16 sq metres. The toilets are common, at either end of the landing. This is a model that did well in Mumbai (then Bombay) in the late 19th and early 20th century, when textile mill owners built ‘chawls’ for their workers. Accommodation was built, and rented out, to attract workers. Ownership remained with the mill owner.

Such housing complexes will need a ‘kirana’ store, an eating house, small dispensary, very limited parking and two or three multi-purpose halls which become the heart of the project. These halls can be rented out, forming a revenue stream, for training and skills upgradation programmes which will benefit those who live in that development. This will ensure that the model is self-sustaining since civic services will cost more and if these are paid for, users can demand better services.

The major stumbling block in the creation of rental housing stock is the Rent Control Act, which effectively killed the rental market in Mumbai. This legislation was introduced to protect tenants from landlords, but had unforeseen effects: no one wants to rent out since it is tough to evict a tenant. So, unless that legal issue is addressed, there will be no takers for this segment. And even after that, it will need substantial government and local civic body support and intervention, in the form of long-term loans. Meanwhile, the slums will proliferate. It is not as if the slum dweller is not paying rent: the slumlord extracts not just a monthly rent on land he has grabbed, through political protection, but also charges a huge deposit before renting out the hutment.

3.6 Crore Indians visited in a single day choosing us as India's undisputed platform for General Election Results. Explore the latest updates here!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 29 Oct 2012, 10:19 AM IST
Next Story footLogo
Recommended For You