urban housing scenario and rental housing in india

URBAN HOUSING SCENARIO AND RENTAL HOUSING IN INDIA

BY

ASHIK

PRIYA

SWAPNIKA

CHAITANYA

URBAN HOUSING FOA, MANIPAL UNIVERSITYURBAN HOUSING IN INDIA

INTRODUCTION- URBANIZATION:1. Urbanization plays a crucial role in the economic development of any nation.2. Urbanization characterized by modernization, industrialization and sociological development.

Shortage

NOTES FOR ABOVE CHART: According to the 2011 census, India has a population of 1.2 billion citizens; 31.1% of the population or around 377 million people reside in urban agglomerations. this is not as high as some other developing countries and leaves significant headroom for rapid migration in the future.


INTRODUCTION- URBANIZATION:1. Presently, urban India is home to 377 million people2. Urban India is expected to house 600 million people

by 2031, an increase of 59% from 20113. India’s urban housing shortage is around 19 million as

per C&W Research's estimates4. India ranks 134th among 137 countries; has the

world’s most unclean air5. In India, slum population in 2011 was 66 million;

projected to be 105 million by 20176. Indian cities are deficient in basic amenities such

clean drinking water, sanitation and lighting facilities7. Public transport accounts for 27% of urban transport

in India. Indian roads are already choked. Journey speeds in India is set to reduce by more than 50% by

2040Shortage

NOTES FOR ABOVE CHART: India’s rate of urbanization was last recorded at 31.1%; much lower than China, Indonesia, Brazil and Mexico


CHALLENGES IN URBANISATION OF INDIA:1. India fails to meet basic standards of living like water supply, public transportation

FloodsTraffic jam

Poor roads , accumulated waste at roadsides

people queuing up for water from standpostsand tankers across cities and towns

The poor state of basic urban services prevents India’s cities from exploiting their potential for generating rapid economic growth and contributing to poverty reduction.


CHALLENGES IN URBANISATION OF INDIA:2. Rapid urbanization has caused wide spread environmental degradation in the country3.India has failed to provide urban dwellers basic needs such as housing. In 2012, the Ministry of Housing and Urban Poverty Alleviation (MHUPA) stated that there is an under-supply of 18.78 million housing units in urban India, of which, nearly 95% affects the Economically Weaker Sections (EWS) andLow Income Group (LIG) of the urban population.4.People who belong to the EWS and LIG sections have no access to formal housing finance. Several of them earn daily wages and live in slums. The 2011 Census enumerated that nearly 65.5 million people reside in slums in Indian cities (13.9 million households). Slums proliferate in almost all metropolitan cities in India.

NOTES FOR CHART: As per 2011 Census, 70.6% of urban population is covered by individual water supply connections, compared with 91% in China, 86% in South Africa and 80% in Brazil. Duration of water supply in Indian cities ranges from 1 hour to 6 hours, compared to 24 hours in Brazil and China and 22 hours in Vietnam.


CHALLENGES IN URBANISATION OF INDIA:

NOTES FOR ABOVE CHART: Best practices like 100% closed drainages, 100% drinking water from taps, 100% electricity to all house holds and 100% latrine facilities within premises are not still achieved in india. India is still behind in terms of basic urban services


URBANISATION AND ITS IMPACT IN HOUSING:• Urbanization leads SHORTAGE IN HOUSING• According to the Ministry of Housing and Urban Poverty Alleviation (MHUPA) in 2012 there were

18.78 million units housing units short in urban India; nearly 95% of this shortfall was in the economically weaker sections (EWS) and low income group (LIG) housing.

NOTES FOR ABOVE CHART: demand for urban housing will scale up by nearly 12 million units by 2017 based on just the current growth of population. Around 23% of this total demand will be generated in the top eight cities of India

These urban housing shortage

encouraged creation of slums.


Urban Housing

Shortage

HOUSING SHORTAGE:

• RAPID URBANIZATION

• IN ADICUATE PROVISION WITH

THE BASIC REQUIREMENTS

• SHORTAGE IN THE EWS, LIG HOUSING

• 18.78 MILLION HOUSEHOLDS IN

20122.

• URBAN POPULATION DECADAL

GROWTH 32% FROM 285 MILLION TO

377 MILLION 2001 AND 2011

• 12TH PLAN PERIOD (2012-17) -11

MILLION HOUSES LYING UNUSED AND

VACANT IN URBAN INDIA

• INDIAN URBAN POPULATION IN 2001 WAS

27.8% OF THE TOTAL POPULATION.

• OVER 5 DECADES, ANNUAL GROWTH OF

URBAN POPULATION RANGED BETWEEN

2.7 TO 3.8%. DURING LAST DECADE IT

INCREASED AT ANNUAL RATE OF 2.7%.

• INCREASING CONCERNTRATION IN

LARGER CITIES.

• PROJECTED THAT BY 2041, INDIA’S

URBAN POPULATION WILL BE 50%.


11.8

4.352.35

18.09

6.8

3.11

29.79

6.213.3

41.17

8.08

2.7

47.49

9.16

2.18

0

5

10

15

20

25

30

35

40

45

50

No

of

Ho

us

es

(in

Millio

n)

1971

(18.5)

1981

(28)

1991

(39.3)

2001

(52.06)

2007

(58.83)

Year

Pucca

Semi-Pucca

Kutcha

2

8

4

6

61.8

Notes for the above chart:90% belong to informal sector with no assurance of a steady income.


Urban Housing

Shortage

Urban Housing Shortage-2012

Notes from the chart:

62% houses are self-owned

38 % rented homes.


Urban Housing

Shortage

States contribute urban housing shortage

Urban Housing Shortage-2012

Notes from above chart: urban Shortage

is amongst the MIG groups which is almost

56%


Urban Housing

ShortageAnswer: A. By implementing policies schemes etc..B. By boosting affordable housingC. By building integrated townshipsD. Providing impetus to redevelopmentE. Increasing FSI limits and building vertical cities

Question: how to reduce issues and shortage in urban housing and slums?


POLICY/ORGANISATION YEAR FUNCTION

Five Years Plans 1951 had assigned housing sector a prominent place in the economy

National Buildings Organization (NBO)

1954 Started under the Ministry of Housing and Urban Poverty Alleviation for technology transfer, experimentation, development and dissemination of housing statistics.

Housing and Urban Development Corporation Ltd. (HUDCO)

April 25, 1970

To deal with the problems of growing housing shortages, rising number of slums and for fulfilling the pressing needs of the economically weaker section of the society

National Housing Policy 1988 To improve the conditions of the inadequately housed and providing a minimum level of services/amenities to all

National Housing bank 1988 under an Act of the Parliament to function as a principal agency to promote housing finance institutions and to provide financial and other support to such institutions.

National Buildings Organization (NBO) -revised

1992-2006 revised keeping in view the current requirements under the National Housing Policy, and various socio-economic and statistical developments connected with housing and building activities.

The National Housing and Habitat Policy

1998 It was formulated after a thorough review of the earlier policy

National Urban Housing and Habitat Policy- revised

2007 It was formulated in view of the changing socio-economic parameters of the urban areas and growing requirement of shelter and related infrastructure.

supportive government measures like easing regulations , releasing more land for housing purposes, offering tax concessions, rationalization of stamp duty ,computerization of land records in many states , repealing of the Urban Land Ceiling Act in most states across the country and Opening up the real estate sector to FDI have had a positive impact on the growth of housing finance in India.

A.POLICIES:


A.INSTITUTIONAL SCHEMES:

the Government of India has launched few more following schemes to alleviate the shortage of affordable

housing:

Rajiv Awas Yojana (RAY): Government of India launched RAY in June 2011(12th five year plan) .The Central support under the scheme

is admissible to States/UTs and Central Government Agencies for providing housing including new houses,

incremental houses, rental houses, transit housing and development/improvement of basic civic & social

infrastructure under the scheme for the slums. 212 projects in 22 states approved with 1,53,326 houses at project cost of ` 8,139.78 crore with central share of Rs 4,470.41 crore. `1632.27 crore has been released so far. Construction of 1406 houses has been completed till date.

Jawaharlal Nehru National Urban Renewal Mission (JNNURM):For rehabilitation of slum dwellers Government launched the JNNURM on 3rd December, 2005 for assisting

State Governments in providing housing and basic civic services like water, sanitation etc to urban poor/

slum dwellers in 65 select cities under the Sub Mission Basic Services to the Urban Poor (BSUP) and in

other cities and towns, under the Integrated Housing and Slum Development Programme (IHSDP).

One of the 3 pro-poor reforms under JNNURM is provision of basic services to urban poor including security

of tenure improved housing, water supply, sanitation education health and social security. As on 16th Oct

2014, 1517 projects have been approved for construction of 14,38,275 houses at cost of ` 20,140.97 crore.

Construction of 1406 houses has been completed till date.

Affordable Housing in Partnership (AHP): As an integral part of RAY, the competent authority has also approved continuation of implementation of

Affordable Housing in Partnership (AHP) Scheme. The scheme has been amended to provide Rs 75,000 per

EWS/LIG dwelling unit of 40 sqm size for housing and internal development components with an objective to

encourage private sector participation in affordable housing. 18 projects are approved at project cost of ` 1192.25 crore with central share of ` 112.53 crore for construction of 20,472 houses. Construction of 4728 houses has been completed


A.INSTITUTIONAL SCHEMES:

• The Rural Housing Fund (RHF) was set up in 2008, to enable primary lending institutions to access funds for extending housing finance to targeted groups in rural areas at competitive rates. Disbursements under the Rural Housing Fund have helped in creation of dwelling units for women, marginal farmers, small artisans, members of scheduled castes and scheduled tribes and minority communities.

• In May 2007, NHB conceptualized the Reverse Mortgage Loan (RML) and formulated the Operational Guidelines for RMLs

• A Mission on Low Cost Affordable Housing : This was announced in the budget 2014‐15 to be anchored in the National Housing

Bank. Schemes will be evolved to incentivize the development of low cost affordable housing. A sum of ` 4,000 crores has also been

allocated for NHB with a view to increase the flow of cheaper credit for affordable housing to the urban poor/EWS/LIG segment.

• The Central Registry of Securitization Asset Reconstruction and Security Interest of India (CERSAI), a Government Company licensed under Section 25 of the Companies Act, 1956 has been incorporated for the purpose of operating and maintaining the Central Registry under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The objective of setting up the Central Registry is to prevent frauds in loan cases involving multiple lending from different banks on the same immovable property.

• Indira Awaas Yojana (IAY) aims at providing dwelling units to houseless below poverty line (BPL) households identified by the gram sabhasand those living in dilapidated and kutcha houses, with a component for providing house sites to the landless poor as well.

• Along with developing housing sector, welfare of construction workers also needs to be seen. As a part of Deen Dayal Upadhyaya ShramevJayne Karyakaram, the Government has launched Portability through Universal Account Number of Employees Provident Fund benefitting around 10 lakhs construction workers and contract labourers.


B.AFFORDABLE HOUSING:

Current Urban Housing in india:Shortage

• Housing‐ industries, Impact ‐ employment, GDP, consumption

• Housing (outstanding amount): India: Less than 8% of GDP, China: 12%, Malaysia: 29%, Spain: 46%, US: 80%

• Housing related activities ‐ 5%‐10% of GDP


Urban Housing

Shortage

Current Demand and supply in urban housing in india:

Factors effecting – housing demand

• Affordability• Self-reliance• Interest Rates• Population• Effective Demand.



Affordable Housing Definition:1. There is no clear-cut definition of the term ‘affordable’, as it is a relative concept and could have

several implied meanings in different contexts.2. According to the RICS Report on Making Urban Housing Work in India, affordability in the context

of urban housing means provision of ‘adequate shelter’ on a sustained basis, ensuring security of tenure within the means of the common urban household.

3. According to the Task Force on Affordable Housing set up by the MHUPA in 2008, affordable housing for various segments is defined by size of the dwelling and housing affordability derived by the household income of the population

4. According to the KPMG Report on ‘Affordable Housing – A Key Growth Driver in the Real Estate Sector’, affordable housing is defined in terms of three main parameters, namely income level, size of dwelling unit and affordability.




Notes from above chart: atleast 300sq ft built up area should be given for EWS under affordable

housing scheme by government where as 500 sqft and 600 sqft built up area for LIGs and MIGs

Affordable Housing guidelines:



Issues in Affordable Housing :

1. Developing affordable housing in Indian cities faces significant challenges due to severaleconomic, regulatory and urban issues.

2. Excessive Control on Development of Land Creates Artificial Shortage.3. Lack of Marketable Land Parcels.4. Titling Issues and Lack of Information.5. Rising Threshold Costs of Construction.6. Lack of Access to Home Finance for Low-Income Groups.

Policy Framework and Regulations for Affordable Housing:

Central Level Schemes1. National Urban Housing and Habitat Policy (NUHHP), 20072. Jawaharlal Nehru National Urban Renewal Mission (JNNURM)3. Basic Services for the Urban Poor (BSUP)4. Integrated Housing and Slum Development Programme.5. Interest Subsidy Scheme for Housing the Urban Poor (ISHUP).6. Rajiv Awas Yojana.


C. BUILDING INTEGRATED TOWNSHIPS:

EXAMPLE: MAGARPATTA CITY,PUNE

Integrated townships are built in places where a large tract of land is readily available. These townships essentially contain retail, housing as well as commercial developments. Such townships also have hospitals and schools; so every amenity is in close proximity. Several states in India are promoting the concept to ease pressure on big cities.

• Magarpatta City is located 9 kms away from Pune's city center and covers a land area of 430 acres.• It is a unique case study in the real estate history of India because of its ownership dynamics; the entire

development is owned by 120 farmers and 800 beneficiaries.

MAIN AIM OF SUCH TOWNSHIPS :1. to approach urbanisation in planned manner2. to promote higher quality of life, work-life balance, cleaner and greener environment


C. BUILDING INTEGRATED TOWNSHIPS:

EXAMPLE: MAGARPATTA CITY,PUNE1. In 1993-94, the owners (farmers) decided to

form their own development company called the Magarpatta Township Development and Construction Company in order to develop the land.

2. The farmers became shareholders of the company to the extent of the land they individually held; all shareholders would get a percentage of the sale proceeds (revenue share).

3. It took the development company seven years to build the township; it promotes the “walk to work” theory in unprecedented measures. The township also has facilities such as a mall, commercial office hub, an educational institution, a hospital, power substations, library and petrol pump within the campus.

4. The city provides employment to over 60,000 people directly and about 20,000 people indirectly.

POSITIVE FEATURE : Innovative ownership model where

120 farmers came together to monetize their land asset

and created one of India’s most successful townships.

NEGATIVE FEATURE : Infrastructure around the township remains a challenge.

MAP OF MAGARPATTA CITY, PUNE


D. PROVIDING IMPETUS TO REDEVELOPMENT: 1. Slums are unhealthy/ informal settlements in urban areas. 2. Majority of the people who belong to the EWS and LIG groups work in unorganized sectors and live

in slums for lack of better options. 3. The problem can be resolved by demolishing slums, temporarily housing dwellers in another

locality and creating better quality housing to replace the slums.4. Slums and old buildings are a part of central business districts and city centric locations at the

moment. Unfortunately redevelopment is a much politicized subject in India; tenants often do not agree to move to temporary houses in far flung locations. However, urbanization mandates effective land-use and redevelopment is an intrinsic part of that process. It needs to be streamlined in a manner that benefits all stakeholders.

E. INCREASING FSI LIMITS AND BUILDING VERTICAL CITIES:

1. Increasing in FSI will save more land and gives more homes2. Without the required infrastructural upgradation, higher FSI will result in extra load on the already

congested and chaotic roads. 3. It must be noted that India lags behind in FSI norms compared to top cities of the world. Cities such

as New York, Tokyo, Hong Kong and Shanghai offer FSI limits between 10 and 15. Comparatively in Mumbai, the permissible FSI ranges between 2.5 and 4 for redevelopment projects and between 1.33 and 4 for non redevelopment projects.

URBAN HOUSING FOA, MANIPAL UNIVERSITYRENTAL HOUSING SCENARIO IN INDIA

RENTAL HOUSINGINTRODUCTION

• Non-availability of lands for low income housing or for evictions

from lands for high value activities.

• Key importance for immigrants - lessens burden on migrants to

invest on shelter till manage to earn for a own house depending on

the economic conditions and employment.

• Government Public housing programmers - demand and aspiration

to own a house

• ‘World Class City’ - displacement of slums and squatters :

Rehabilitation projects - dwelling unit given on ownership basis (no

tenants considered)

• Commercial penetration – low income families opt for renting and

share holding as affordable form of housing in the cities

• Squatter tenants and multi-occupancy - Informal settlers and urban

poor households develop rental housing

RENTAL HOUSING SCENARIO IN DEVELOPING COUNTRIES

• Two very clear trends that appear in the tenure scenario:

1. Rental housing is higher at the city level, than at the overall

country level

2. Rental housing is higher in developed countries at both the

country and city level.

• Renting is an urban phenomenon – The economy of the cities of

developing countries - allow greater mobility of people from rural to

urban areas – 50% population are tenants.

• Urban hosing shortage in the country - 29 million units : 26 million units – economically weaker section (monthly income upto Rs.5000)

3 million – low income group (monthly income of Rs. 5,000-7,500)

• Inadequate supply of affordable housing - Half or more population in larger metros live in slums or other informal accommodation.


TYPES OF RENTAL HOUSING SUB-MARKETS

1. LOCATION (city periphery, industrial unit, commercial areas, along

important routes, etc)

2. TYPE OF SUPPLIER (private individual/ household, trust, employer,

government, etc)

3. HOUSING TYPE (single room, dwelling unit, bed)

4. GOVERNMENT POLICIES (contractual, leasing, sub-letting, etc)

In India, chawls - low income rental housing : historically, built by

industrialists to attract cheap labour from different places (Mumbai,

Ahmedabad, Surat, Baroda - booming cotton textile industry).

OTHER TYPES OF ARRANGEMENTS:

1. SUB-LETTING: Tentant rents his rented space to another tenant

thereby sharing cost as well as earn some income.

• Result of High market rents and high demand for affordable rental

housing

• Charges are lower than market rents

2. SHARING:

• Type 1 - Male migrants sharing a room together, thus, sharing the

rent (reduction in the cost of living)

• Type 2 - Families visiting for short durations or relatives shifting

into the city : share the rented space without an finance involved.

3. RENT ON LAND: Land is rented but the structure belongs to the

tenant.

4. EMPLOYER-PROVIDED HOUSING: Rental housing provided by

employers In industrial areas (chawls of Mumbai and Ahmedabad )

• Result of development of townships in remote areas (Oil India

Limited (OIL), Oil and Natural Gas Corporation (ONGC), Iron and

Steel Townships and near the source of raw materials.


DEMAND AND SUPPLY OF RENTAL HOUSING

1. ALTERNATIVE HOUSING - new migrants, floating

population, city’s population segment (who cannot

afford any ownership)

2. MIGRANTS (unskilled labour – search work) who

cannot afford any rental housing squat along the

roadside, near construction sites.

Migrants - major component of the tenant population

of a city . Types of migrants:

a) LONG-TERM OR PERMANENT MIGRANTS –

Intention of settling down in urban area through

regular employment, but keeping ties with the

native village/town

b) SEASONAL MIGRANTS – Ones who stay in the

urban areas for more than 60 days in a year but

return back for some period.

c) MIGRANTS TIED TO THE EMPLOYERS – Ones

moving from one place of employment to other,

and about who no estimates are available.

DETERMINANTS OF RENTAL HOUSING

Demand for rental housing is directly linked to the migration rate into the city, market

conditions as well as the socio-economic situation of the household which include:

1. OPPORTUNITIES OF LIVELIHOOD - Industries and construction activities attract male

migrants and unskilled labour.

2. AFFORDABILITY: Varies with income to invest on housing.

• 26% urban poor households - income of Rs.578/month (monthly rent of a 25-30 sq.m.

house is Rs.1000 or more) .

• Worse the location and amenities available – lower is the rent.

• To share costs - sharing, subletting, sharing bed

3. STAGE IN LIFE-CYCLE OF HOUSEHOLD:

• younger couples, with younger/few children - tend to rent and gradually invest in

housing (flexibility in cost, location and comfort).

• Shift from rental to ownership vary from household to household - If the location is

favourable, it may discourage a shift to ownership or migration to another area.

4. LACK OF ACCESS TO OWNERSHIP HOUSING:

• Ownership housing is not affordable for a large number of urban poor – Squatting

• demand for affordable housing is not proportional to the supply in the market


SUPPLY OF RENTAL HOUSING

1. SQUATTER SETTLEMENTS: Settlements come up are vacant plots (near

place of work) - unsuitability for development or disputes.

• Low-lying areas, river beds, marshy lands, etc.

• With the passage of time - build more than need for their personal use,

put up rooms for rent.

• Low rents - low quality of housing and high risks of eviction.

2. QUASI-LEGAL SETTLEMENTS: Consist of quasi-legal sub-divisions and

tenement construction (Ahmedabad):

• Community-based sub-divisions: A community on the basis of their

social or occupational groups buys or leases out land from a landlord -

Allocations and rent payment is determined by group leaders.

• Landlord based subdivisions: Peripheral land areas with no returns are

given by landlords for housing (low income groups rent such lands and

build their own shelters who with time sub divide their plots to rent

out)

• Owner-developed Rental Units: Owner undertakes both land-

subdivisions and shelter construction.

OTHER LESS POTENT SUPPLIERS OF RENTAL HOUSING ARE:

• GOVERNMENT SUPPLIED RENTAL HOUSING - largely confined to its

employees.

• HOUSING CO-OPERATIVES - owners would rent part of the house or

entire house.

• INDUSTRIAL HOUSING - rental housing for the workers.

In the 1950s and 1960s, the national government had two schemes to

create rental housing for the industrial workers:

1. Subsidised Industrial Housing Schemes (SIHS)

2. Integrated Subsidised Housing Scheme (ISHS)

In the 1980s - Night Shelter for the vagrants and homeless – stopped

due to lack of management.

• Supreme Court ordered Delhi Government to improve facilities at

existing shelters in the state

• It was mandated that the cities with more than 5 lakh population to

provide one night shelter per lakh population equipped with basic

facilities - electricity, water arrangements, toilet facilities, sanitation

arrangement, and beddings i.e., blankets, mattresses, and jute

mats.


NATIONAL HOUSING POLICY 2007

• Nothing specific for the migrant workers - increasing supply of rental

housing

• Temporary rest accommodation with on site toilet facilities to be

provided by the construction companies and the public authorities.

• Employer housing

• No mention of the transit accommodation or anything special for the

recent migrants.

RENT CONTROL REFORMS UNDER JNNURM

Objective – Reform rent control act by improving urban housing situation.

Some of the major benefits are:

• Increased investment in housing – positive impact on State Domestic

Product (SDP) and increase in supply of rental housing resulting in

reduction of rental levels and a decline in number of slums.

• Improved and adequate housing situation - reduce the need to

allocate government funds for housing and will enable them to release

additional resources for financing other social objectives.

• Increased accessibility and affordability of rental housing - improved

security of tenure and reduction of black money deals on account of

unlawful payments (e.g., key money) by landlords or tenants.

CURRENT SCENARIO OF RENTAL HOUSING IN INDIA

• Rental housing - 30.4% in urban India (National Sample Survey

Organization's 65th Round of data of 2008-09.

• Marginal increase in renting from 28.1% in the 48th Round (1993) to

29% in the 58th Round (2002) – no significant change in renting in

20yrs.

• Owned dwellings have increased from 57.3% in 1993 to 61.6% in

2008-09.

• Shift to ownership has taken place from employer housing as well as

other types of housing and not rental housing.

• Industrialisation shifting to the private sector has resulted in the

share of employer housing declining over time.

• Renting increases with increase in monthly per capita expenditure –

low income families live in own house as they cannot afford to pay

rent (does not allow them to save and spend on health and

education).


• Top three states in rental households - Andhra Pradesh (47%),Tamil Nadu (46.7%), Karnataka (44.2%)

• States with rental housing above the national average (30%) -Delhi (36.4%), Himachal Pradesh (31.6%)

• States with least occurrence of rental housing (>20%) - Bihar,Jammu &Kashmir, Uttar Pradesh and Madhya Pradesh

• States with higher than national average of urbanisation (largeproportion of rental housing) - Gujarat and Maharashtra

• Significant proportion of Employers’ housing (governmenthousing) - Himachal Pradesh, Orissa, Chhatisgarh, Jharkhand andChandigarh

• Types of house-types available for renting - 31.5% pucca houses, 20%

semi-pucca houses.

• Economically better off House-owners invest in building tenements,

usually single rooms (pucca or semi-pucca type)

• Informal settlements, comparatively prosperous households let single

room/one part of the house on rent, sharing bath room-toilet, water

and electricity.

• 71% katcha housing - poor tend to live in katcha housing (self-owned

type)

• 60% pucca houses - non-poor tend to be living in pucca housing (high

proportion of rented housing)

• Ownership housing – greater floor area than rental housing, almost

double the size of rental housing, hardly any differeence in the per

capital floor size consumption (maximum per capita housing area

found in employer housing).

• 30% - rental housing, 70% - pre occupied dwelling


ISSUES

government’s approach to urban poor housing has been focused on

providing them with ownership housing and land titles - neglect of the

importance of rental housing

POLICIES AND LEGISLATIONS IN RENTAL HOUSING IN INDIA

LEGAL RENT AGREEMENTS

1. Lease (or Rental) Agreement

• Covered by the restrictive rent control laws

• Rent amount to be charged - devised by the local executive, legislative

or judicial government.

For Delhi:

• Maximum annual rent - 10% of the cost of construction and the

market price of the land

• Construction and land cost - based on historical values and not the

current market valuation (older the property, smaller is the rent).

• Rents can only be increased by a fraction of the actual cost the

landlord has incurred in improving the property.

2. Lease and License Agreement:

• Grants the tenant a license to occupy the property for a period of 11

months (pre-emptive measure), with an option for periodic renewal.

• They are not registered under the Rental Agreement and do not

give tenants power to partly own the property

RENT CONTROL ACT

• The practice of imposing a legal maximum upon the rent in a

particular housing market for social justice in the housing market -

check uninhibited rent increases and tenant eviction .

• The first Rent Control legislation In India - Bombay in 1918

immediately after the First World War (increased demand for

housing as soldiers returned home from war fields).

• Delhi and Ajmer Rent Control Act of 1952 - protect the interests of

the slum dwellers

Some of the major criticisms against rent control act

1. Fixation of rent - major disincentive for investment in rental housing

as it has a very low rate of return.

2. Formation of black, uncontrolled rental housing markets

3. Difficult to evict the tenant to resell the house - reduces liquidity in

the market for ownership housing.


AFFORDABLE RENTAL HOUSING INITIATIVES BY THE GOVERNEMENT:

MUMBAI METROPOLITAN REGIONAL DEVELOPMENT AUTHORITY (MMRDA)‟S RENTAL HOUSING SCHEME

• private builders construct rental housing for MMRDA.

• Government of Maharashtra (2008) - Build 5 lakh, 160 sqft homes in 5 years without any capital or land contribution from MMRDA.

• Mumbai slum free - existing shortage (20 lakh units) and projected growth of EWS/LIG migrants.

• MMRDA offered two options – an FSI and Transferable Development Rights (TDR) model - developers build rental housing on a plot they own, and

receive the incentive FSI as TDR to be used on a project north of the rental housing plot.

• Under the scheme, developers receive an FSI of 4 if they use 1 FSI to build rental homes on one-fourth of their plot.

• MMRDA proposes to rent the units they receive at between Rs. 800-1,500 per month. Eligible applicant households must have monthly income over Rs.

5,000, have lived in Maharashtra for 15 years and not own a home in the MMR.

• Developers costs included land and construction, infrastructure charge between Rs. 250-1,000 per square meter (sqm) of which 90 percent goes to the

local municipality towards upgrading the external infrastructure and 10 percent is kept with MMRDA towards rental housing maintenance. Developers

are generally able to finance the construction from the pre-sale of market units.


REFERENCES:

1. Bridging the Urban Housing Shortage in India, by KPMG

2. CHALLENGES & OPPORTUNITIES FOR THE HOUSING SECTOR IN URBAN INDIA - A Cushman & Wakefield Research Publication

3. STATE OF HOUSING IN INDIA by Government of India, Ministry of Housing and Urban Poverty Alleviation AND National Buildings

Organisation

4. Trends and processes of urbanisation in India by amitab kundu5. India’s urban awakening: building inclusive cities, sustaining economic growth by MCKINSEY GLOBAL INSTITUTE6. Shelter by HUDCO7. Population projections for india and states, by census of india

8. India’s rental housing by Arjun kumar

9. National urban rental housing policy by Government of India, Ministry of Housing and Urban Poverty Alleviation

10. Rental housing in informal settlements by centre for urban equity

11. www.india.govt.in

12. http://mospi.nic.in/mospi_new/upload/syb2013/CH-28-HOUSING/HOUSING%20-%20WRITEUP.pdf

13. http://www.livemint.com/Opinion/a5jnMOHQsHEk47Rr9mUWPI/Five-charts-on-the-state-of-Indias-housing-sector.html

14. http://pragati.nationalinterest.in/2014/07/indias-urban-housing-challenge/

15. http://www.architecturelive.in/project/82/magarpatta-city-Pune-Asso.-Space-Designers-Pvt.-Ltd./

http://www.india.govt.in/

http://mospi.nic.in/mospi_new/upload/syb2013/CH-28-HOUSING/HOUSING - WRITEUP.pdf

http://www.livemint.com/Opinion/a5jnMOHQsHEk47Rr9mUWPI/Five-charts-on-the-state-of-Indias-housing-sector.html

http://pragati.nationalinterest.in/2014/07/indias-urban-housing-challenge/

http://www.architecturelive.in/project/82/magarpatta-city-Pune-Asso.-Space-Designers-Pvt.-Ltd./

urban housing scenario and rental housing in india

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