Even as the real estate market pundits went through the fine print of the draft of the new housing policy, debating pros and cons, majority are unanimous that affordable rental housing will finally mature the Mumbai market.
Initial estimates show that over three million flats locked up in Mumbai, Pune and Lonavala could be in the market for lease.
Developers are eager to jump the bandwagon, provided there are initial sops. “More Floor Space Index (FSI) is needed and the landowners must be provided with eviction protection to ensure that their properties remain safe,” said Sunil Mantri, vice-president, Maharashtra Chamber of Housing Industry (MCHI).
He felt that the 6-12 per cent interest return, along with a three-to-five-year lease period, would trigger excitement. “The commercial property market has now settled down to 15-year lease at affordable rates,” added Mantri.
Denying that the rentals would eat into the buyers market, he felt that instead rental housing was a parallel market - a business opportunity which he developers would cash on, he stated.
Rental market won’t take off unless there is rationalisation of property tax, feels Anil Harish, legal expert on taxation issues. “At present, leasing out a flat on current rent charges costs the owner a whopping 60 per cent tax, which is absurd,” added Harish.
As it is known, the Indian real estate market is an 80 per cent buyers’ game, unlike the West and other big Asian countries, where the rental housing stock is large, varied and easy to get.
Thanks to pending litigation on the Supreme Court on the Bombay Rent Control Act, landlords have largely chosen to lease out to companies with paid capital of Rs 1 crore, rather then individuals as such deals stay outside the purview of the Rent Act. Experts accept that the protecting the tenants, a large vote bank, was a political necessity in the SC case.
“But the heated real estate market can come down if the rental housing is promoted in a prospective terms without disturbing the existing tenants. Then individuals can enter this market,” asserted solicitor Marzi Chinoy.
