In a bid to boost rental housing, the government will be approving the model tenancy law in the next one month, housing and urban affairs secretary Durga Shanker Mishra said on August 26.
He hoped that the states would pass the legislation over the next one year.
He was speaking at an Assocham webinar on "Housing for All- Affordable and Rental Housing: The Way Forward".
“We are changing the tenancy law… The model tenancy law will be approved in a month by the competent authority. My ministry would ensure that within one year every state passes legislation to implement this model law,” Mishra said.
The secretary said the current tenancy laws in various states were skewed towards safeguarding the interest of tenants.
"We hope that 60-80 per cent of the vacant flats will come into rental market once this law is implemented," he said, adding that the real estate developers could also convert their unsold inventories into rental housing.
The ministry had floated the draft model tenancy law in July 2019. It proposes to establish an independent authority in every state and Union Territory for registration of tenancy agreements and even a separate court to take up all tenancy-related disputes.
The draft model tenancy law has proposed limiting the advance security deposits to two months’ rent, and has also suggested heavy penalties for tenants who decide to overstay. Those who do may have to shell out double the rent for two months and even four times.
On the Affordable Rental Housing Complexes (ARHC) scheme, Mishra said the programme aims to convert lakhs of vacant flats owned by the Centre and states into rental housing for migrant workers at a very cheap rent.
"We want to bring vacant homes owned by the central, state and urban local bodies into this scheme and provide affordable rental housing to migrants/urban poor," he said.
The secretary said the scheme would generate a return of 13 per cent to make it financially viable.
Last month, the housing ministry had issued guidelines to implement the ARHC scheme in the country.
The Union Cabinet on July 8 approved the ARHC scheme for urban migrants employed in the industries, service sector and manufacturing sector close to their workplace in industrial as well as in non-formal urban sectors.
The scheme was announced by Finance Minister Nirmala Sitharaman as part of the Rs 20 lakh crore economic package to deal with the COVID-19 pandemic.
“More than one crore houses are empty even now in the country because many owners have their own apprehensions on renting them out. Also, there is so much of land empty just outside the city limits and even inside. We must think if a tweak in our master plans is possible so that we can use the empty areas for affordable rental housing. We are soon bringing a new law on rental housing, and this will lead to more structured approach in this sector both in urban as well as rural areas,” Mishra said.
“With the COVID-19 pandemic, we saw an unprecedented reverse migration of labourers, students and industrial workers. There is a large segment of population who needs a house but perhaps not in the ownership model. A model that allows a worker to live in a reasonable accommodation close to his workplace whether through private sector housing or government sector housing such as JNNURM is the need of the hour,” said Amrit Abhijat, joint secretary, the Ministry of Housing And Urban Affairs.
To make ARHC scheme tax efficient and boost investment in rental housing, Naredco President Niranjan Hiranandani demanded accelerated depreciation and increase in rate of standard deduction and that private players as well as financial institutions be enabled to earn decent return.
Property consultant Anarock's chairman, Anuj Puri, said rental housing offers great opportunity, but to encash that tenancy laws need to be reformed.
Anthony de Sa, chairman, Madhya Pradesh RERA, opined that the RERA structure could be used under another kind of legislation to manage the rental housing sector.