Housing crisis, untouched

• In India, economic growth has been slowing down. One of the sectors which has been worst hit is the housing sector. To counter this problem recently, Model Tenancy Act, 2019 was released by the Ministry of Housing and Urban Affairs.
• In this context, it is necessary to understand the problems in housing and real estate sector, the provisions of the act, its consequences and way forward.

Problems in housing and real estate sector

• There are issues between the tenants and owners which end up in the courts and the hearings are prolonged. Thus there is a need for special courts.
• Absence of a holistic law covering residential and commercial properties.
• Model Tenancy Act, 2019
• The Act aims to promote rental housing and ‘balance the interests’ of landowners and tenants.
• It covers residential and nonresidential properties, but it is apparent from the framing that it is largely aimed at the urban residential sector.
• One of the provisions is the constitution of Rent Courts and Tribunals - courts to hear cases is limited to the tenancy agreement submitted to the Rent Authority.

Consequences of the Act:

• For the Act to be applicable, the property must be a registered one but in India, there is a trend of having property ownership transfered mostly without proper registration.
• Thus, either a majority of the rental agreements will continue to be unregistered thus nullifying the legislative intent of the Act, or
• The Act might formalise existing arrangements and lead to gentrification and, consequently, an increase in rents, which is the opposite of what it sought to achieve.

Way forward

• There needs to be a greater focus on the upper end of the housing market in order to make a difference in the lower end of the market.
• For instance, across urban India, vacancy rates in urban areas is 10.1% while in slums it is 7.3%.
• We see several empty apartment projects in our cities, but rarely an unoccupied slum or lowincome colony/
• The Act needs to differentiate between commercial tenancies that attract a lot more institutional investment and residential tenancies that are largely held between individuals and households/
• There needs to be a supply of formal affordable rental housing- This requires investment on the part of the Central and State governments.
• There can social initiatives like housing built to rent for migrants, low wage informal and formal workers, and students; rent to own housing for unsteady low wage households; and even rental housing allowances/vouchers for the most marginalised in the housing market.

Conclusion

• Thus the Model tenancy Act 2019 is the step in the right direction but more needs to be done in this regard considering the Indian housing sector.

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