Need for Steps to Promote ARHC
The government needs to take measures for improving financial viability of rental housing projects such as exemption of property tax for pre-defined period and ease of capital for development, according to property consultant CBRE. In its report 'The Advent of Rental Housing in India', the consultant said that more than 11 million sold units have remained unoccupied out of the total 110.14 million houses in urban India and the unlocking of the existing unoccupied sold stock for rental accommodation can go a long way in addressing India's housing shortage. To unlock the potential of the rental housing segment, CBRE said the government has already launched Affordable Rental Housing Complex (ARHC) scheme and also brought the Model Tenancy Act, 2021, but felt that "a lot more remains to be done". The model Act, which has been circulated to states for implementation, is aimed at overhauling the legal framework surrounding the rental housing market, thereby institutionalising the segment by creating a rent authority to provide a speedy dispute adjudication mechanism, the report said. The CBRE pointed out that the model Act has certain gaps that need to be plugged. The creation of a robust rental housing market would require further measures, which include the enactment of a Rental Housing Policy, it advised. Stating that some provisions in the Act need greater attention, CBRE pointed out that the model Act has left multiple terms undefined such as 'uninhabitable', 'detrimental to the interest of the landlord' and 'immoral purposes'. The timeline for resolution of some disputes needs to be specified in the model Act. These include disputes on withholding essential services, revision of rent and contraventions by property managers. "While the bar on eviction has been removed by the act, the process remains as restrictive as before: eviction can be carried out only on limited grounds, and that too after taking permission from the rent court. Besides the need to re-look at certain provisions in the model law, the CBRE said it was important that certain steps be taken at a structural/policy level to ensure that rental housing is able to flourish in the country. India is at the lower spectrum of gross rental yields, with most investors historically relying on property price escalation for financial returns. Therefore, there is a need for measures that improve the financial viability of rental housing projects in India. The measures could range from exempting property tax for an initial predefined period, allowing additional low-cost FSI for rental housing, encouraging PPP (public-private partnership) participation for developing rental housing on government land, facilitating ease of capital for build- to-lease and rent-to-own residential projects etc.
Tags : News/Views CBRE Public-Private Partnership ARHC rental housing projects The Advent of Rental Housing in India uninhabitable low-cost FSI