Rental Housing Scheme of Mumbai – Facilitating Affordable Housing

“Aamchi” Mumbai is replete with the huge demand supply mismatch of property as far as the affordable housing is concerned. No wonders it then hosts largest number of slums in India and is densely populated. The Maharashtra State Housing Policy of 2007 initiated the Rental Housing Scheme (RHS) with the participation of private sector. The scheme is underway in the urban local bodies of Thane, Mira Bhayander, Kalyan and in Panvel Taluka of Raigad district.

The Public Private Partnership scheme:

  • Rental Housing Scheme envisages housing for all through its commitment to make available affordable Rental Housing Units (RHU’s) to the masses.
  • The private sector is entrusted with the task of building affordable housing units in return of an incentive Floor Space Index (FSI) for providing tenements of 160/320 Sq Ft. carpet area free of cost to the state. The state Allots these units to lower income households at a rent decided under the policy.
  • MMRDA has been appointed as the Project Implementation Agency for the Rental Housing Scheme. The authority has been implementing the ambitious project since the year 2008 in urbanisable areas in Mumbai Metropolitan Region (MMR,except in the limits of Navi Mumbai and Matheran Municipal Council). Location clearance is granted by the MMRDA while the concerned Planning Authority grants the development permission. The MMRDA has granted clearances to 51 RH proposals which has a potential 97574 RHU.

The scheme was however a failure due to several issues and hence the  Government replaced the ‘Rental Housing Scheme’ by ‘Affordable Housing Scheme’ in the Municipal areas and has discontinued the Rental Housing Scheme in the non-municipal areas of MMR in 2013. In August, 2014, the Government has replaced the ‘Rental Housing Scheme’ by ‘Affordable Housing Scheme’ in the Municipal areas and has discontinued the Rental Housing Scheme in the non-municipal areas of MMR. However, when even the affordable housing scheme failed to take off owing to several delays in the Government approvals, lack of participation by the private sector as the incentives offered weren’t inciting enough,  they are back with certain changes in their old Rental Housing Scheme.

The latest version of the rental housing scheme places a greater emphasis on the connectivity of the rental housing properties with the rest of the Mumbai unlike the previous scheme which was focused on creating such units in the outskirts. In addition, livelihood opportunities and other basic and civil amenities have also been taken into consideration. Moreover, the latest proposals provide relatively higher incentives to the developers in terms of higher FSI and a proportion of area for sale in certain cases. Some of the proposed changes are as follows:

  1. As per the new scheme the size of the housing units should be increased from 160 sq. ft. earlier to 280 sq. ft.  This will help in reducing the population density and hence create better living standards.
  2. The developers would be rewarded with additional Floor Space Index (FSI) between 3-4, up from 3 earlier. Any additional FSI that the builder wishes to load onto the project will follow a premium of 60% of ready reckoner rate to be collected from the developer.
  3. Slum dwellers and rehabilitated people would be provided with Rehabilitation Authority (SRA) eligibility cards. Those excluded from this will be included in the rental-housing scheme.
  4. 50% of Rental Housing Units (RHUs) will be used to rehabilitate occupants in run-down and derelict buildings. Policy for allotment of the remaining 50% is under formulation at the Government level.
  5. The private builders who have been allotted land as per the rental housing scheme would be given the freedom to build other flats for sale subject to the condition that 25% of the built-up area is reserved for the purposes of rental housing. This accommodative stance towards the developer’s commercial interest should bring additional traction from the investors and builders.
  6. Emphasis on connectivity to the industrial hubs also creates potential for employment and hence better quality of life. In addition, the new RH projects would also take care of the connectivity to important places such as airports, railways etc.

Nevertheless, only these changes won’t be sufficient for the implementation of the scheme. The stalling of the progress of work involved in several schemes is commonplace in the real estate sector for the want of several approvals. As per the industry sources, in the initial stage of the scheme ~26500 proposed rental housing units by the MMRDA were already granted location clearance by the planning agency but got delayed due to delay in construction permissions by the respective civic bodies. Hence, it is imperative that the Government introduces a single window for clearance so as to optimize the time and effort of the builders. Rental Housing Scheme does have substantial benefits for society at large.

The comeback of the scheme will create additional housing stock for the affordable housing starved Mumbai. However, the implementation of the above changes and sufficient incentives to the developers will remain the key behind the success of the scheme.

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