About four years ago, the Union Cabinet announced the launch of the “Housing for All by 2022” mission with a major focus on affordable housing. Since then, various policies and reforms have been initiated by the ruling government, but how far have these policies helped address what is a severe shortage of housing in urban India?
I was recently checking data from the Census of India and the National Sample Survey Organisation and found some interesting statistics.
So, more than one-tenth of the households in India lived in rented homes in 2011. Of which, almost four-fifths of the total households living in rented homes were in the urban sector.
Could rental housing become the solution for India’s housing shortage?
India’s chronic paradox of riches
Rental housing, undoubtedly, is one of the key elements of affordable housing. Despite that, the majority of the policy initiatives by the central government has focused on home ownership.
Thus, shelter depreciation continues to rise. Urban India today faces a shortage of 11 million homes.
Now, here is the paradox. While there is an acute shortage of housing units, about 10.2 million units are currently lying vacant across India!
Snapshot of policies
Legislations like the Rent Control Act of 1960 and the 1976 Urban Land Ceiling Act (ULCRA) Act made rental housing unattractive for investors as there was a cap on rentals. And that has continued.
In its Draft National Urban Rental Housing Policy of October 2015, the government said that some of the major factors preventing investment in rental housing are rent control laws, unrealistically low rental yields, poor maintenance of rental stocks, and low-quality of the housing.
How does the government intend to address these problems? As per the policy, the role of Central Government is to act as facilitator and support state governments in preparing state-specific policies on rental housing.
Interesting times ahead!
As a nation, we must understand that despite several sops and tax concessions, a good percentage of the population can still not afford to buy a home. Thus, the National Urban Rental Housing Policy 2017, which is currently awaiting the Union Cabinet’s approval, will offer some respite.
Meanwhile, the government should also look at converting unsold inventory into rental homes. The Rent to Own Scheme under the National Urban Rental Housing Policy is also likely to help the migrant population.
