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Rents in island city may rise as Maharashtra could revive controversial amendment to act

A majority of big properties with frozen rents are in the island city

mumbai Updated: Jan 15, 2016 00:46 IST
Kunal Purohit
Kunal Purohit
Hindustan Times

Seven months after it decided to scrap the proposal to amend the rent control act, after flak from citizens, the state government has now decided to revive the plan. This move will affect the rent for several old properties, especially in the island city, which includes south and central Mumbai.

The state is now considering lifting the freeze on the rent of homes above 860 sqft and commercial spaces above 500 sqft from the purview of the Maharashtra Rent Control Act, 1999, a move which, if approved, will make the rent of these spaces on a par with the market. A majority of big properties with frozen rents are in the island city. The protection of the Act is a reason why the real estate prices are high given the limited real estate. Tenants of a large number of houses in old buildings, which are bigger in size, pay less rent than the prevailing rates in the market as they are protected by the Act.

The call to revive and retain this clause as part of the state housing policy was taken at a meeting called by chief minister Devendra Fadnavis on Wednesday, to discuss various aspects related to the state’s housing policy.

The decision comes after the housing department produced figures to show that only 9% of residential properties were above 860 sqft and would be affected by the decision.

“Our study found that an overwhelming 91% of properties were under 860 sqft and wouldn’t be affected. Hence, the view in the meeting was that if such a small number of tenants are affected, then we should go ahead with the amendment,” said a top-ranking bureaucrat, not wishing to be named.

The decision to retain the clause will come as a surprise for tenants because Fadnavis had in June last year withdrawn the clause after tenant associations protested against the move, indicating the government was unwilling to touch such a sensitive issue.

Wednesday’s decision gives the amendment, called a necessity by many urban planners, a fresh lease of life. “It was decided that the clause will be retained as part of the policy and it will then be sent to the cabinet within a month. The cabinet will take a final call on the policy and specifically, the clause,” said a top-ranking bureaucrat, not wishing to be named.

Rajendra Mehta, chairman of the Property Lessors Association, questioned the data and said, “Most of these large properties are in the island city itself and very few are in the city. Hence, they should look at what per cent of the island city properties will be affected by such a move, rather than looking at properties all over the city.”

First Published: Jan 15, 2016 00:41 IST