When Rajeev Sinha, who works with an advertising agency, was looking to buy a home, the place he could zero in was Greater Noida, which fits in his budget. After house hunting for almost six months and doing financial calculations, he decided to stay in a rented flat.
“The rent in Greater Noida for a decent three BHK flat is Rs 14-000-Rs 15,000. To buy the similar property, I will have to pay Rs 40,000-Rs 50,000 in EMI. By staying in a rented flat, I can save Rs 35,000 per month which I can put in another investment tool. Also, it will give me the flexibility to switch places. So renting makes perfect sense for me,” Rajeev explained.
As more people are opting for rented flats, the implementation of the proposed Model Tenancy Act, will create a fresh demand for rental houses. As a result, the rental housing market is expected to grow in double digits, given the growing urban population and the widening demand-supply gap into consideration. At present, over 21 million (27.5 per cent) urban households live in rented accommodations, according to the 2011 Census.
“Indian cities lack any formal rental housing space for low-income groups, especially the migrant population. The National Urban Renewal housing policy supports the development of a strong rental housing market. The time is appropriate to support ownership housing by a strong, vibrant and sustainable inclusion of the rental housing market with different models to address diverse housing needs for various segments of the population,” Knight Frank said in a report.
According to the government’s estimate, the rental housing market is worth Rs 1.5 lakh crore and there will be a huge surge in demand post this law, which will give a new platform for realtors and help meeting the housing demand.
About 1.1 crore houses were lying vacant in the country and the new proposed law will give confidence to homeowners to rent them, according to the 2011 Census. “The population living in rental housing has no willingness to own and landowners find rental housing unattractive due to low residential yields...” the report added.