There could be good news for you if you're looking to rent a house at an affordable rate. A government-appointed panel has recommended a new law for regulating rental housing and suggested that tax benefits be given to encourage developers to set up rental housing projects.
The 19-member panel headed by Jaithirth Rao, chairman, Value & Budget Housing Corporation, will submit its report next month. According to sources, the suggestions include the setting up of fast track tribunals for speedy resolution of all rent-related cases, and giving infrastructure status to large rental housing projects to enable them to avail of tax holidays, which will lead to lower costs.
The panel has also suggested that affordable rental housing should include affordable hostels, dormitories and flats that are smaller than 60 sq m.
"There is a need for an institutionalised market for rental housing in India," said Firdose Vandrevala, chairman, CII National Committee on Real Estate & Housing.
Cities like Delhi, Mumbai and Bangalore have a migrant population of 30-35% each. Many people in this category, as well as other residents of these cities, prefer to rent houses instead of buying them.
"House prices are very high in India, making it difficult for an average person to own one. So, rental housing is the alternative," said Rohit Kumar, head of research, DTZ India, the local arm of one of the world’s leading property consultancies.
But there isn’t enough rental housing available because rather than renting out their flats, owners prefer to keep them under lock and key. Reason: evicting a tenant is considered to be cumbersome and time consuming.
"Then, rent yields are only 5%, which is taxable. Therefore, most developers prefer to build and sell rather than build and rent," added Vandrevala.