With demand for houses up for sale remaining muted, the government is mulling the rollout of rental housing policy to promote the rental segment in an effort to revive the struggling housing sector in the country.
According to sources in the Finance Ministry, meetings with representatives from the real estate industry have already been held and industry stakeholders have been asked to submit their views on a policy framework for the sector.
“The developers are demanding a 10-year tax holiday on profits earned from rental housing. We have sought a detailed note from them on rental housing and if approved, the budget is likely to give some directions on this,” a senior official from the finance ministry told this publication.
The ministry has already started discussions with industry bodies on their expectations from the Union Budget for this financial year, which is likely to be tabled before the Parliament in July.
Meanwhile, developers are upbeat about a rental housing policy, which they feel will give a fresh boost to the industry.
“In metros, home prices are high, so it is not possible for everyone to own a house. As realtors, we realise this and we want the government to understand the situation. The rising cost means that a large section of people, at least in the bigger cities, will live on rental housing.
We have to come up with policies and incentives that will support this segment of real estate and help people who give roofs to the less-privileged,” Kushagr Ansal, director of Ansal Housing and president, Confederation of Real Estate Developers’ Associations (CREDAI), Haryana said.
Such models are already prevalent in developed nations and developers feel that financial incentives will help promote rental housing. According to Dhiraj Jain, director, Mahagun Group, “Most of the countries such as the US, UK, and China have more than 50 per cent housing in the rental domain. As Realtors, we want the government to pay heed to this. Financial support and rebates are some of the steps that will help people to invest in houses that will go into the rental segment”.
Developers also feel that this will bring investment to the sector. “Rental housing, along with co-living, can solve housing problems and the government should use all techniques to make it lucrative for investors. With REITs, developers and investors will create some wealth and this is likely to be used in rental housing also because of an improvement in liquidity,” Ashok Gupta, CMD, Ajnara India Ltd said.
Union Budget to show govt hand According to sources in the finance ministry, the government has already held meetings with stakeholders and, depending on the feedback, may give indications on which direction the policy will take during the presentation of the Union Budget in July take cue from international trends, say builders.
According to industry representatives, most advanced economies around the world witness a substantial portion of real estate assets going into the rental segment. For instance, Dhiraj Jain, director, Mahagun Group, says countries like the US, UK, and China have nearly 50 per cent of housing in the rental domain and that the Indian government should promote investments in this space