Roadmap for India’s Rental Housing Infrastructure

Roadmap for India’s Rental Housing Infrastructure
Nov 2020 , by , in Interviews

Sriram Chitturi, Founding President, Rental Housing Association of India (RHAI)

Founder, Guesture

Urban India’s infrastructure, especially housing for the migrant population, has barely been able to keep up with the pace of urbanisation. The country’s urban population grew from 290 million in 2001 to 340 million in 2008 and reports estimate that the number will reach 590 million by 2030.

While upper middle class and middle-class migrants struggle with leased apartments that come with high rentals, huge capital investment, and long-term commitment, semi-skilled and unskilled migrants put up with shelters that are deplorable, crammed, and unhygienic.

Recognising this urgent need to provide decent living conditions to the workforce that forms the backbone of urban India’s economy, the Rental Housing Association of India (RHAI) recently submitted a detailed recommendation to the Ministry of Housing. These recommendations are based on a white paper titled ‘Roadmap to Rental Housing in India’, co-released by Guesture, a pioneering co-living and housing rental start-up. Here are some of the key proposals:

Recognition and Legislation

In the context of the recently launched Affordable Rental Housing Complexes (ARHCs) scheme, under the Pradhan Mantri Awas Yojana, a key recommendation is to accord ‘infrastructure’ status to the rental housing industry in India.

Based on learnings from past experiences with affordable housing initiatives in India, we believe that a multi-pronged approach is necessary. Unless we set up Social Rental Housing, Need-based Rental Housing and Market-based Rental Housing schemes to cater to diverse sections of the society, the ARCHs is likely to see limited success.

Another critical move will be to enact the long-pending National Urban Rental Housing Policy. At the state-level, the government must replace the existing Rental Control Act with Rental Regulation Act. These will be key drivers in attracting the participation of professional rental housing operators.

Public-private partnerships

RHAI has also recommended creating a viable ecosystem that encourages building of rental housing for employees or for socially vulnerable section of the society as part of corporate social responsibility (CSR) and formulation of Residential Real Estate Investment Trust (RREIT).

Policy interventions in terms of land acquisition, approval processes, and taxation are vital for attracting requisite stakeholdersto build quality rental housing infrastructure. In fiscal terms, this mean extending the lowest applicable GST, offering 100 per cent tax deductions against capex for rental housing built by India Inc. under CSR, and innovative financial products for rental housing schemes.

It is equally important to encourage private players to take up continuous creation and supply of quality rental housing for different migrant subsets. Initiatives such as Quarters by Guesture, a one-of-a-kind staff housing solution exclusively for Micro, Small and Medium Enterprises (MSMEs), demonstrate the immense untapped potential of rental housing in urban India.

On-Ground Execution

We have appealed to the Central Ministry of Housing and Urban Affairs to develop economically feasible rental housing models, such as Rental Voucher Scheme, Rent-to-Own Scheme, and Shared Ownership Scheme based on internationally successful formats. This would enable migrants to truly afford rental homes and not just have potential access to housing allotments.

The government must define and support setting up of Residential Rental Management Companies to manage facilities professionally. Without efficient management, simply setting up rental housing infrastructure cannot enhance the quality of life for migrants. We have also recommended an online portal for all rental housing properties, facilitating mandatory online registration, and providing incentives to businesses and educational institutes that facilitate quality housing to their migrant workforce and students respectively.

The need of the hour is to create an entire ecosystem that supports the intentions of the ARHCs scheme. It will not only provide sustainable housing solutions to migrants, but also help support a crumbling urban infrastructure that threatens to pull down the economy.

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