Announced in July 2020, Affordable Rental Housing Complexes (ARHC} has been envisaged as a scheme under Pradhan Mantri AWAS Yojana-Urban (PMAY-U) to provide ease of living to urban migrants engaged in informal sectors of the economy. Its success in achieving the said aim remains doubtful.

By: Sapna Srivastava

COVID-19 pandemic has resulted in reverse migration of urban migrants/ poor in the country. Urban migrants stay in slums/ informal settlements/ unauthorized colonies/ peri-urban areas to save cost on housing. They need decent rental housing at affordable rate at their work sites. 

In order to address this need, Ministry of Housing & Urban Affairs has initiated Affordable Rental Housing Complexes (ARHCs), a sub-scheme under Pradhan Mantri AWAS Yojana- Urban (PMAY-U). This will provide ease of living to urban migrants/ poor in Industrial Sector as well as in non-formal urban economy to get access to dignified affordable rental housing close to their workplace.

Beneficiaries for ARHCs are urban migrants/ poor from EWS/ LIG categories. ARHCs will be a mix of single/double bedroom Dwelling Units and Dormitory of 4/6 beds including all common facilities which will be exclusively used for rental housing for a minimum period of 25 years.

These complexes will ensure a dignified living environment for urban migrants/poor close to their workplaces at affordable rates. This will unlock existing vacant housing stock and make them available in urban space. It will propel new investment opportunities and promote entrepreneurship in rental housing sector by encouraging Private/Public Entities to efficiently utilize their vacant land available for developing ARHCs

According to the Ministry of Housing and Urban Affairs, AHRC scheme is expected to benefit 3,00,000 workers initially. However, the scheme’s success hinges on its ability to provide a viable alternative.



The ARHC scheme will be implemented through two models:

  1. Utilizing existing Government funded vacant houses to convert into ARHCs through Public Private Partnership or by Public Agencies
  2. Construction, Operation and Maintenance of ARHCs by Public/ Private Entities on their own vacant land

Model 1 – The scheme provides very little in the way of actual financial support and requires state governments to use funds already granted under the PMAY/JNNURM and if not used, the State governments have to return those prior grants with interest. 

Model 2 – It which envisions entirely new construction and at a time when state governments and private institutions finances are in a parlous state, this effectively means that it is unlikely this scheme is going to result in any considerable housing.

As per Shankar Gopalakrishnan Member, KISLAY Social Research Collective which studies unorganized, understudied and new forms of production, labor and social action, the scheme appears to be based on unrealistic assumptions that do not address the actual problems with the housing that workers currently are able to access. “The Model 1 route — repurposing of vacant housing built under prior schemes — does not ask why this housing is unoccupied. When there is desperate demand for housing, the most likely reason that public housing would be unoccupied would be because it is unsuitable for use by workers — located in the wrong area, too small, lacking basic facilities, or simply unfit for habitation. Converting this to rental housing will not address any of these problems. On top of this, the scheme’s financial projections — provided in Annexure 5 of the guidelines — do not seem realistic. In a recent survey of 349 workers across three states by our research collective, we found that the vast majority of daily wage worker families lived in homes with rents between Rs 2,000 and Rs. 3,000 per month in Delhi and Rs. 1,500 to Rs. 2,500 in Dehradun. But in the ARHC scheme’s financial projections for Model 1 housing in these two cities, the rents in Dehradun are expected to start from Rs. 2,500 per month and those in Delhi from Rs. 3,000 a month — implying that, based on our data, many workers will find these ‘affordable’ houses unaffordable. Beyond this, the rent for dormitory beds in Model 2 housing is projected to be Rs. 3,000 a month — a rate roughly three to four times higher than single workers in Dehradun, for instance, pay at present for shared rooms.”



As per the surveys, most informal workers two major apprehensions over the government-led formal rental housing project were on firstly the rents, it they would be as low as their current housing and second, the housing proximity to workplaces. Other concerns included, the duration, procedures, eligibility and documentation involved in acquiring these formal rentals and the loss of linkages to existing community networks.



Rental housing is usually not lucrative for the private sector. To increase its supply, it requires innovative financing mechanisms or a strong push from the government in terms of incentive packages to pull market interest, as per Centre for Science and Environment. 

The challenges in implementation of AHRC scheme are the availability of land and necessary infrastructure to create such a supply, may pose a challenge. Moreover as the yields are likely to be low. The scheme till now has been able to attract a lukewarm response from private participants. While, it is not viable for developers who have land parcels within city limits, the government’s incentives and concessions that include, 50% additional FAR/FSI, tax reliefs at par with affordable housing and concessional loan at priority sector lending rate, etc., to develop ARHCs on their own available vacant land for 25 years has not been an enough to win over private developers. Then there are also the issues of Maintenance and upkeep of houses and the existing tenancy laws that need revamping. According to Getamber Anand, CMD, ATS Infrastructure Limited., “Affordable rental home cannot be successful till the government incentivizes it or there are some kind of tax benefits. It is not really profitable and builders cannot afford to build to rent and it does not make sense till the government supports it.”

The draft National Urban Rental Housing Policy (NURHP), drawn by the Union Ministry of Housing and Urban Affairs, released in 2015 identified different kinds of housing demands, including:

  • Social rental housing for homeless and urban poor
  • Need-based rental housing for migrant labor, single women, single men and students
  • Market-driven rental housing for people who are tenants by choice, including upper income segments and government employees


Factors to Consider

Migrant workers often live on the worksite industrial units or construction sites. Those unable to secure such accommodations are forced to live in under flyovers and on pavements. Slums and other informal settlements have proliferated mainly due to low rents and less documentation needs. 

Another factor that requires immediate attention is the reasons for private and government built houses lying vacant. The low quality construction of government built houses and municipal service delivery and lack of connectivity infrastructure for private housing in far flung areas are the major reasons for informal workers not ready to pay higher rent for such formal housing.  The absence of affordable transport options plays a critical role in much of the government or private built housing lying vacant.

To address this issue of vacant built houses and disinterest from private players, the government will have to address the absence of proper monitoring and implementation, that has plague the 1.08 lakh government built houses as well as the high land costs, and unavailability of sizeable land pockets near business areas in the cit. These factors have inevitably led to no takers for private and government affordable rental housing, jeopardizing the success of the scheme.

Local solutions, such as mapping informal workers living near vacant government housing, so that they can be offered the choice of renting in those units can be explored. .



The National Urban Rental Housing Policy draft suggests the rent-to-own scheme, under which the beneficiary gets a housing unit on a leased basis for a fixed number of years. The beneficiary pays a monthly instalment that contains a certain percentage of rent and the rest as thrift.

When the amount paid reaches a certain percentage (around 10 per cent or as decided) of the total unit price, the house will be registered on the beneficiary’s name. The beneficiary gets full ownership on 100 per cent payment. The benefit of this scheme is that the tenants feel secure as the landlord is the government. Public welfare measures will reach faster to these beneficiaries, given the COVID-19 outbreak.

There are no contractual obligations to buy the unit in question either. Chandigarh implemented a rent-to-own scheme, while it there are attempts to promote it in Andhra Pradesh.



In many countries around the world. Build-to-rent model for affordable housing has become popular. It works as a way to build housing to retain control of the building and also renting out to lower income families. China is taking advantage of this ‘built-to-rent’ model.

Chile, Brazil and the US issue “rental vouchers” to low-income groups, which can be exchanged in lieu of rent in formal, private housing. This enables them to access a range of housing options, assures landlords of steady rental revenue and relieves the pressure on social housing agencies.

In Thailand, schemes like Baan Makong enable civil society organizations to skill communities to self-finance and self-construct forma affordable homes and last-mile infrastructure (like water and electricity lines), while negotiating with government agencies for secure tenure and provision of trunk infrastructure. 

In Hong Kong, land is owned by the government and auctioned to developers within a clear regulatory framework. The Hong Kong Housing Authority is the largest landlord of public rental housing in the world, with funding coming from the sale of land. In 2016, about 30 per cent of the population were public tenants.


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