Opportunities for India's Rental Housing Market

The Housing segment in India constitutes for a significant part of the real estate and construction sector in terms of volume.

09 Nov 2018

By Anshuman Magazine

Opportunities for India's Rental Housing Market

The Housing segment in India constitutes for a significant part of the real estate and construction sector in terms of volume. Recognizing the growing importance for this segment, the government has been announcing various policy initiatives and reforms to provide the much needed boost for the segment. The key reforms that have come into play are the Pradhan Mantri Awas Yojana (PMAY) scheme, Real Estate Regulator Act and the impetus to the Affordable Housing Segment. The sector is already witnessing green shoots of revival as developers, end-users and investors embrace the changes these new policies bring in. Despite the market being subdued in the past few years, the demand for housing in India continues to grow. Traditionally considered a sound investment choice by generations, there is a growing population looking to rent homes within cities across India. The rapid urbanization of our cities, increasing trend of nuclear families, growing employment opportunities and movement of students for higher studies to urban cities and surrounding suburbs presents a great opportunity for rental housing. Another steady end user base is that of expatriates and diplomats who come to live in the city for a short period of time basis their professional commitments.

Rental housing offers a convenient and cost effective option for all migrant populations, who may not want to make a long-term financial commitment in a city. It is the most readily available option to the growing demand for housing in urbanizing countries such as India. Renting a home emerges as a better choice for tenants across the income spectrum as it allows greater mobility and flexibility to the migrant population, especially in cities with high capital values.

Realizing the potential that the rental housing market has in India, A Task Force on Rental Housing was constituted by Ministry of Housing and Urban Poverty Alleviation (MoHUPA), whose objectives were to:

  • Develop a strategic policy intervention to promote Rental Housing as a viable option;
  • Create a legal and regulatory framework to enable Private Sector participation in rental housing; and to
  • Improve the financial attractiveness of Rental Housing

Based on the recommendations of the task force, a “National Rental Housing Policy” is currently under formulation. The vision of the policy is to enable the growth of rental housing in a holistic manner.

The Draft Model Tenancy Act, meanwhile, attempts to create a framework for the regulation of tenancy for commercial and residential properties. It tries to balance the rights and responsibilities of landlords and tenants alike through rental contracts; and aims for registration of rental contracts with the relevant authorities.

The Government is currently working towards the promotion of rental housing through such legislative support. The implementation of the policies surrounding rental housing will go a long way in promoting the segment while providing options for rental accommodation across urban spaces in the country.