From ET Realty
Even as the Real Estate Sector market is stagnated, the rise in rental housing demand is giving a new face to the metropolitan cities. An analysis of the national rental market of the top 11 cities, by a real estate portal, showed that demand for residential properties on lease was the highest in Bengaluru followed by Mumbai and Pune. Large job market in Bengaluru and Pune, high cost of owning a home in Mumbai, increasing migration of people to the city led to the growth.
But the rise is just recent, over the past few months. The problem is not so much with supply as it is with the shortage of demand. As the country faces a shortage of 19 million houses, around 10.2 million completed units are lying vacant, which can be absorbed under rental housing programme for weaker sections, a recent report by CBRE stated.
According to CBRE, around 56 per cent of the shortage of 19 million units is from the economically weaker section (EWS) with an average annual household income of up to Rs 1 lakh, while around 40 per cent in the lower income group (LIG) with an income of Rs 1-2 lakh.
A major reason which has been holding back its growth is the lack of any regulatory framework.
Factors leading to shortage of demand
2. No fixed framework for the Deposit money
“Sometimes owners ask three months deposit, sometimes they ask 10 months deposit. This hinders the growth of demand,” said Sudarshan Purohit, CEO and co-founder of Zenify.in.
3. There is no regulation for brokers also.
“Today anybody can become a broker. There should be licensing and background check done for every broker,” said Sudarshan.
5. Lack of any regulation on the hike of rent
The supply in the sector is why Budget 2016 should give utmost importance to this particular section of the sector.
Recommendations for Budget 2016
1. When ‘Housing for All 2022′ was finally launched by the NDA government last year, it was only about providing 20 million houses on ownership basis by 2022 with an approximate central commitment of Rs 3 lakh crore. There was no mention about ensuring 20 % of the units should be for rental housing, as was proposed earlier. This should be looked into on priority.
2. The government should fast track the process of preparing the Draft National Urban Rental Policy 2015 and Draft Model Tenancy Act 2015.
3. Increase Tax exemption for rental income from 30 % to 50 % while giving woman headed households full exemption.