The housing boost

Context: The Model Tenancy Act can unlock the value of vacant homes, protect house-owners.

Need for urban housing:

• Rising urban population: 

• India is set to double its urban population between 2018 and 2030, with estimates projecting that by 2028, New Delhi would become the most populous city on the planet.
• The large-scale migration to urban centres in India is bound to create pressure on housing markets.
• Housing shortages: As per the Report of the Technical Group (TG-12) on Estimation of Urban Housing Shortage (2012), the economically weaker sections and low-income groups currently face 96% of the total housing shortage in India.

Issue of rising vacant houses:

• According to the 2011 Census data, nearly 11 million housing units were vacant in the country. This, combined with a shortage of nearly 19 million units in 2012, presents a perplexing picture.
• There are several policy bottlenecks due to which homeowners prefer to keep their homes vacant - 

• The existence of pro-tenant rent control laws across Indian states continues to be an obstacle. These laws protect the rights of the tenants while diluting those of the homeowners. 
• Informal renting: In the case of housing that was not vacant, as per the National Sample Survey Organisation’s data of 2012, 71% of households did not have a written contract. 
• Judicial delays: in case of disputes have dampened the spirits of homeowners over time.
• Presence of low rent culture: The meagre rents that homeowners are allowed to charge under the rent control laws are the reason behind a large number of dilapidated housing units and chawls, such as in the case of Mumbai.

Significance of Model Tenancy Act, 2021:

• Repeals existing rent control laws: Removing monetary ceilings on the rent amount and allowing for negotiation on the duration of tenancy between homeowners and tenants based on market standards.
• Addresses market challenges: That exists in the rental market for both homeowners and tenants, ranging from the fear of illegal occupation/eviction, arbitrary security deposit and structural maintenance-related demands, and high transaction and legal costs.
• Fast track judicial pendency: In India, an average commercial civil suit was disposed of in 1,445 days in a district court, as per World Bank’s Doing Business Report in 2018.
• It envisions improved contract enforcement through a three-tier dispute redressal mechanism.
• However, protracted litigation remains a risk. While the adjudicatory bodies at the second and third-tier of appeal are required to dispose of cases within a 60-day timeline, no such time limit is placed on the first tier, the rent authority.
• Provides a filip to private participation: With a legal framework in place, the private sector can enter into affordable rental housing markets through models like “Build to Rent” and “Rent to Own”.

Conclusion: While the Act is a much-needed reform for India’s housing sector, one hopes that states use this opportunity to unlock the economic value of vacant housing and increase access to good quality housing for all demographics.