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 people
2. Urban India is expected to house 600 million people
by 2031, an increase of 59% from 2011
3. India’s urban housing shortage is around 19 million as
per C&W Research's estimates
4. India ranks 134th among 137 countries; has the
world’s most unclean air
5. In India, slum population in 2011 was 66 million;
projected to be 105 million by 2017
6. Indian cities are deficient in basic amenities such
clean drinking water, sanitation and lighting facilities
7. 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 standposts
and 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.

2. Rapid urbanization has caused wide spread environmental
degradation in the country
3.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) and
Low 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.

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
4.35
2.35
18.09
6.8
3.11
29.79
6.21
3.3
41.17
8.08
2.7
47.49
9.16
2.18
0
5
10
15
20
25
30
35
40
45
50
NoofHouses(inMillion)
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
Shortage
Answer:
A. By implementing policies schemes etc..
B. By boosting affordable housing
C. By building integrated townships
D. Providing impetus to redevelopment
E. 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 sabhas
and 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 Shramev
Jayne 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 several
economic, 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 Schemes
1. National Urban Housing and Habitat Policy (NUHHP), 2007
2. 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 manner
2. to promote higher quality of life, work-life balance, cleaner and greener environment

C. BUILDING INTEGRATED TOWNSHIPS:
EXAMPLE: MAGARPATTA CITY,PUNE
1. 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 homes
2. 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 HOUSING
INTRODUCTION
• 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 (large
proportion of rental housing) - Gujarat and Maharashtra
• Significant proportion of Employers’ housing (government
housing) - Himachal Pradesh, Orissa, Chhatisgarh, Jharkhand and
Chandigarh
• 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 kundu
5. India’s urban awakening: building inclusive cities, sustaining economic growth by MCKINSEY GLOBAL INSTITUTE
6. Shelter by HUDCO
7. 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./

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