In a declaration supporting the rental housing segment in the country, M. Venkaiah Naidu, the Home and Urban Poverty Alleviation Minister, stated that promoting the rental housing stock in the country was imperative as the segment withholds within it a huge potential for the real estate market of the country. He further urged the central and state governments to shift their focus from ownership of homes to rental housing for this segment is more comprehensive.
Naidu threw light on the fact that rental housing segment in the country consists of only 11 per cent of the total stock of housing. This is when the country is currently facing a shortage of approximately 190 lakh housing units in the urban regions while 110 lakh houses are simply lying vacant. If these vacant properties are put to use, the problem of housing shortage in the country can be easily met. In fact, many countries have already exploited this segment- in Netherlands, the rental housing segment comprises of 35%; Hong Kong has 31%; Austria has 23%; and the UK consists of 20%.
Some of the reasons that Naidu gave for low demand of rental housing in India include bad quality of construction, rigid rent control laws, very low rental yields, improper maintenance and fear of losing out on ownership. These factors are majorly yielding a negative impact on the demand for rental housing in India.
Naidu expressed his support in favour of the rental housing segment while speaking at the National Consultation on Draft National Rental Housing Policy, 2105. He was of the view that, “Rental housing offers huge investment opportunity at the bottom of the pyramid given the rising demand for alternative housing option to ownership housing on account of mounting migration.”
The Draft National Rental Housing Policy, 2015 will aim to realise the full potential of the rental housing sector by initiating many legal and regulatory reforms, enabling flow of funds, encourage construction and maintenance organisations and creating rental housing stock.