Tax Relief

Want for measures comparable to capital relief, property tax relief to advertise rental housing tasks: CBRE

According to real estate advisor CBRE, the government needs to take steps to improve the financial viability of rental housing projects, such as getting exempt from property tax for a pre-defined period of time and making it easier to raise capital for development. In his report, The Advent of Rental Housing in India, the consultant said that more than 11 million units sold out of a total of 110.14 million homes in urban India have remained uninhabited and the development of the existing vacant rental housing sold may be a long one Way to address India’s housing shortage.

“… a shift in demographics, socio-economic trends and consumer needs are fueling demand for rental apartments.

To unlock the potential of the rental housing segment, CBRE said the government had already put in place an Affordable Rental Housing Complex (ARHC) program and also tabled the Model Tenancy Act 2021, but believed “much more remains to be done”.

The model law, which was submitted to the states for implementation, is intended to revise the legal framework for the rental housing market and thereby institutionalize the segment by creating a rental authority that offers a quick dispute settlement mechanism, the report said.

The CBRE pointed out that the Model Law had certain loopholes that needed to be closed. Creating a resilient rental housing market would require further action, including adopting a rental housing policy, she advised.

In his report, the consultant made 11 recommendations for the growth of the rental housing market in India.

“Implementing the model rental law would be key, as housing is a state issue. The center must ensure that states change their existing laws or pass a new policy without watering down the core of the core policy, ”it said.

CBRE noted that some provisions of the law deserve more attention, pointing out that the Model Law left several terms such as “uninhabitable”, “harmful to landlord’s interests” and “immoral purposes” undefined.

“The timetable for resolving some disputes must be set out in the law. These include disputes over withholding essential services, reviewing rent and property manager violations, ”the report said.

The schedule for resolving some disputes must be set out in the Model Law. These include disputes about the withholding of essential services, rent adjustments and violations by property managers.

“Although the ban on eviction has been lifted by law, the procedure remains as restrictive as before: eviction can only be carried out for limited reasons, even after approval by the tenant court.”

Aside from the need to reconsider certain provisions of the Model Law, it is important that certain steps are taken at the structural / political level to ensure that rental housing can thrive in the country.

“India ranks in the lower spectrum of gross rental returns, with most investors historically reliant on house price hikes for financial returns, so measures are needed to improve the financial viability of rental housing projects in India,” the consultant said.

The measures could include exemption from property tax for an initial pre-defined period, enabling additional low-cost FSIs for rental housing, encouraging PPP (public-private partnership) participation in the development of rental housing on government properties, facilitating the raising of capital for the Construction of rental and rental housing projects, etc.

“The Model Tenancy Act will be a turning point for the Indian rental housing segment. The law aims to encourage private participation and help monetize the vacant rental stock by building trust in the landlord-tenant relationship and providing a quick dispute settlement mechanism.We also expect the law to have far-reaching implications for the formalization of the housing market in India said Anshuman Magazine, Chairman, India & South-East Asia, Middle East & Africa, CBRE.

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