MUMBAI: Developers are being incentivized to develop rental housing in the Mumbai Metropolitan Region (MMR). This includes a full income tax waiver on rental income for 10 years, a 5-year property tax exemption, and GST concessions. Additionally, the Maharashtra Housing Area Development Authority (Mhada) has proposed a free increase in floor space index—0.5 in Mumbai and 0.3 in MMR.
On Wednesday, Mhada’s vice-president, Sanjeev Jaiswal, presented the draft rental housing policy to builders, seeking their feedback for refinement. Mhada is designated as the nodal agency for this policy and has suggested a 50% reduction in development charges, with funds collected by local bodies being returned to housing societies for maintenance purposes.
The authority emphasizes the need for full property tax exemption for the first 5 years and a 50% exemption for the subsequent 5 years to promote the operation and maintenance of rental housing. Additional proposals include waiving stamp duty and GST, along with capping interest rates on financial institution loans related to the projects at 6%.
The policy also explores public-private partnerships and hybrid models, allowing the government to grant long-term land leases for rental housing. Additionally, developers would have the option to exit rental projects by selling units to tenants or in the open market.
Jaiswal stated that Mhada has prepared a Rental Act and accompanying rules. These will be presented to the Chief Minister and housing minister before being brought before the legislature. He highlighted that 21 lakh homes in Maharashtra are currently unoccupied, with 44% located in the MMR, indicating a significant inventory held by Mhada and Cidco.
Rental housing aims to support migrants, students, laborers, working women, tourists, disaster and project-affected individuals, the homeless, and economically weaker sections, serving as a viable alternative to slums. The goal is to provide rental options that can eventually transition to ownership.
One significant issue in rental housing is the lengthy dispute resolution process, which can take between 5 to 15 years, creating barriers in the rental market for both landlords and tenants. “Approximately 67% of disputes exceed 5 years, while only 10% are resolved within 2 years,” said Jaiswal. A rental housing portal is proposed to list all rental options made available under the policy.
The state government aims to create more rental housing across Mumbai and MMR to meet growing needs as it seeks to position the region as an economic hub by 2030, with a target of constructing 30 lakh homes—including 8 lakh dedicated to rental housing—by Mhada.
On Tuesday, the state cabinet approved a cluster redevelopment policy for all Mhada layouts exceeding 20 acres, removing the requirement for resident consent; only housing society approval is now necessary.
