AFFORDABLE RENTAL HOUSING

BYUSHA BATRA

Additional DG, CPWD, Mumbai

“HOME IS WHERE HEART IS”

“TO OWN A HOUSE is One’s BIRTH RIGHT”

TYPES OF AFFORDABLE HOUSING

• Affordable ownership housing ; who can afford to buy a house for self.

• Social Rented housing; from local authorities or registered providers, rented at lower rates than market.

• Intermediate Housing; Partly owned and partly rented under the shared ownership schemes.

Creating solutions for providing affordable housing to all is a

challenging enterprise

The World Bank, estimated that world had 872.3 million people below the new poverty line, of which 179.6 million people lived in India. In other words, India with 17.5% of total world's population, had 20.6% share of world's poorest is in India (2013)Hence, priority to provide affordable housing to the poor.

Definition of Affordable Housing – MHUPA (2011)

Source: Guidelines for Affordable Housing in Partnership (Amended), MHUPA, 2011

As per HUPA EWS are those with earning below Rs. 1,00,000 per annum and LIG between Rs. 1,00,000 and Rs. 200,000 per annum

Urbanisation leading to HousingShortage in India

• As per 2011 census, 31.16% lived in urban areas.• growing migration of people from rural to urban areas has led to

shortage of Land Housing Transport. Amenities like water, power and open spaces.

HENCE PROVIDING AFFORDABLE HOUSING BOTH AT RURAL AND URBAN AREA SIMULTANEOUSLY MAY SLOW DOWN THE MIGRATION.

Basic requirement & affordability• An affordable housing project should be

located within affordable travel distances from a major workplace hub and should be connected adequately through public transport.

• Basic amenities like sanitation, adequate water supply, power, parks, school & health facility within project or neighborhood.

LOCATION

The DDA had in September 2014 rolled out nearly 25,000 flats via a lottery system in suburban areas including Dwarka, Rohini and Narela. Nearly 8,400 allottees, have surrendered their flats.Reasons location of flats Insufficient built-up area

Housing Shortage in Urban IndiaDespite a housing shortage of approximately 19 million units, around 11.09 million houses are vacant in urban areas as per 2011 census data.If these vacant houses are made available for rental housing, then some shortage, could be addressed. But main shortage in urban India is in EWS housing meant for slum dwellers.

Formulation of National Urban Housing & Habitat Policy 2007.

Jawaharlal Nehru National Urban Renewal Mission. Interest Subsidy Scheme for Housing the Urban Poor. Affordable Housing in Partnership : Modification in

JNNURM Setting up of a High Power Task Force on Affordable

Housing. Launch of the Rajiv Awas Yojana Prime Minister Awas Yojana – Housing for all

Major Government Initiatives and Programmes for Affordable Housing

ISSUES IN THE DEVELOPMENT OF AFFORDABLE HOUSING

•  

• Continued and rising population growth.• Lack of availability of urban land, marketable land parcels and

rising costs of land / property and construction.

• Lack of financial resources with the governments.• Lack of access to home finance for EWS and LIG• Regulatory constraints like lengthy approval and land use

conversion process, multiple statutory approval requirements leading to cost escalation.

•

Mhupa DRAFT MODEL PROVISION FOR AMENDMENT TO RESPECTIVE MUNICIPAL

ACT(s) PROVISION 1;a. In all Town Planning Scheme or Development

scheme, there shall be reservation of not less than 10% of the gross land area under each scheme for the purpose of providing housing accommodation to (EWS) and (LIG).

b. The size of the plot reserved for EWS and LIG shall not be less than 30 sqm and 40 sqm respectively and not exceed 48 sqm.

Mhupa DRAFT MODEL PROVISION contd…

PROVISION 2 & 3 WOULD APPLY, WHEREVER PROVISION 1 IS NOT INCORPORATED

Provision 2: Plotted Development Scheme. In all plotted development schemes of area above one hectare

(10,000 sqm) not less then 10% of the gross land be earmarked for EWS & LIG

For land between 4000 to 10,000 sqm, either land may be reserved for EWS & LIG or shelter fee as prescribed by the appropriate government.

Provision 3: Group Housing Schemes. For 3000 sqm and above reservation to the extent of 15% of

permissible FAR or 35% of the total dwelling units, whichever is higher shall be provided.

Mhupa DRAFT MODEL PROVISION contd…

• Inventory be maintained of all the plots or houses for (EWS) and (LIG) and ensure its protection from encroachment.

• Every developer of such scheme shall be incentivized .

• Fund resourcing from non residential land development / buildings above 1000 sqm .

which may be used for provision of land, housing, basic service etc. to the urban poor.

Strategy for Increase Supply of affordable housing

• Use of Government land bank

• Additional FSI for construction of tenements of specified size .i.e 30% EWS, 30% LIG, 30%MIG & 10% as per choice of developer.

• Inclusive Housing in all Housing Projects by mandating 20% of built-up area for EWS & LIG

• Reviving PPP scheme for Rental Housing at strategic locations.

• Strategy for optimum use of existing land resource by encouraging REDEVELOPMENT

INCREASING FSI• Possibility to explore 4 FSI as per master plan or development plan ?• Density max. permitted for units with area upto 40 sq. m 500 + 10% = 550 DUs per

Hactare• Plot area= 1 ha.=10000sq.m.• Total built up area with 4 FSI= 40000 sq.m.• Area for amenities @ 7.0sq. m. / personfor each unit=7x4.5= 31.5 sq.m.• Unit area=25 sq.m. units. • Usable total area as / density= 550x(25+7x4.5=56.5)= 31075 sq.m. i.e. 3.1 ha. Out of 4 ha.• Max. usable plot area for 40 sq.m. units. 550x(40+7x4.5=71.5)= 39325 sq.m. i.e. 3.93 ha. 4 FSI can be consumed only if unit area is 40 sq.m. whereas max. requirement is for EWS

with unit area of 25 sq.m.

AS/ NORMS OF DENSITY & AMENITIES ONLY 3 FSI CAN BE CONSUMED FOR EWS HOUSING & 3.9 , IF ONLY LIG PROVIDED

HOW FSI OF 4 CAN HELP UNLESS NORMS REVISED ? SEEN IN CASE OF DHARAVI…….NO BIDDERS

Rental housing• Rental housing can be simply defined as a property owned by an

individual or by a legal entity, for which the resident pays a monthly rent to the owner. It is simply a formal or informal contract between the tenant and the landlord to rent the dwelling for a certain period of time at a predetermined price.

• Rental housing lessens the burden on a migrant to invest till one can own for varying durations of stay whether in search of employment or education.

• As per Census 2011, over 27% of urban residents of the country are living on rent and most of them are informal in nature. The NSSO report has highlighted that, 25% of the hired dwelling units are informal and only 5% are formal.

• As all the States in India are governed by their respective Rent Control Acts (RCA) which is skewed towards tenant protection, a fixed rent with limited options to increase rentals etc. has resulted in rental housing being economically unattractive and thereby creating an informal market.

Models on Rental Housing RENTAL HOUSING FOR THE PROSPECTIVE MIGRANTS/HOMELESS: There is a need to create sufficient number of rental accommodation for

homeless and destitute & for migrants who cannot afford to buy a house initially.

State government along with the ULBs / pvt. Sector may construct rental

houses of various sizes for families hostels/dormitories for single persons

These can be given on rent up to a certain time on a short to long term basis. thereafter occupants are expected to move to their own houses except for homeless, destitute, aged people and people with special needs .

Models on Rental Housing contd… RENT TO OWN SCHEME; • Ultimate goal is to favor homeownership, to benefit the poor who

can’t afford to buy a house.• Initial allotment of the unit is done on lease basis for a fixed number

of years.• Buyer deposits the monthly rent / EMI in bank account.• The EMI contains a certain percentage of rent and rest as thrift.• When EMI amount reaches certain percentage (i.e.10%) of total unit

price, property will be hypothecated to bank and government.• In case of non-payment of EMI, bank and government will resell

property. • Thrift amount returned to buyer without interest.• On 100% payment, property papers are handed over to the buyer by

de-hypothecation.

Models on Rental Housing c0ntd…..• CONVERTING SLUMS ON ULB LAND TO RENTAL HOUSING;• Nearly 60% of slums across urban India are on government owned lands,

in which 40% are on lands that belong to Urban Local Bodies (ULBs) –municipalities, municipal corporations, town panchayats, municipal councils,

• Slums occupying ULB land can be converted to rental housing.• ULB can give a “no eviction guarantee” to the household for 10 years or

more, and gain rent revenue from the household in exchange for the utilization of the ULB land.

• Such scheme in Ahmadabad have given good revenue for the ULB.• This model could generate between 15 and 25 % of the ULBs’

revenue

AFFORDABILITY OF RENT TO OWN• Low income Group 40% population• Annual income Rs. 2,00,000/-• Monthly income Rs. 16,667/-• Affordability @ 30%for EMI / Rent = 5000/- can own a house of 25 sq.m. area in 8-9 years considering the cost of const. 20,000/- per sq.m. giving cost of flat= Rs. 5 lac If Interest free loan given by Govt.& common areas and services are developed and

maintained by Govt. LIG house can be owned after renting in 8-9 years, EWS in 16-18 years as his annual income is 50% of LIG

Govt. to explore such schemes for eradication of SLUMS

RENTAL HOUSING POLICY• Earlier government planned to club rental housing policy with Housing for All

scheme. Later, decided to launch the scheme separately. Ministry of Housing and Poverty Alleviation will provide 75 % of the

construction cost of rental units . 25 % to be borne by states, urban local bodies and NGOs . Dormitories for singles / migrant labour. Rental units 300 sq feet area in case of families. To be vacated within five years by which time migrants were expected to buy

their own home or rent one at market rate. However, vacation not applicable for destitute and homeless populations. On pilot basis, the project is expected to be implemented in Delhi before it

will be implemented in other cities.• Wednesday 04 May 2016

 

UNITED STATES OF AMERICA; CANADA ;• Choice Vouchers programme allowing tenants to seek their own

housing from private landlords, rather than confining low-income tenants to public housing ghettos. Voucher program (originally called certificates) aimed at low-income rental housing as part of their federal housing policy. Recipients choose a house or apartment available in the private market and contribute roughly 30% of their incomes toward rent, with the program paying the difference up to l voucher; they are responsible for finding a house or apartment that meets the program standards with a landlord who is willing to participate in the program. Subsidy is paid to the landlord directly by the public housing agency.

CASE STUDIES OF OTHER COUNTRIES

CASE STUDIES OF OTHER COUNTRIES AUSTRALIA;• The Government launched National Rental Affordability

scheme (NRAS) to help increase the supply of affordable rental dwellings by up to 50,000 by 2012, with a further 50,000 to be made available post July 2012 subject to demand. Rent for these properties was to be charged at 20% below the market rate for eligible tenant. Australian Government provided funding to increase the supply of affordable rental dwellings .

• Comments / suggestions for USA, & Australia Capping will be reqd. for different categories as anything

more than 30% is to be born by Govt. Feasible only where combination of proximity to working

place & availability of low rental areas exists.

CASE STUDIES OF OTHER COUNTRIES contd…              IRELAND• This scheme enables the purchase of a new or a second-hand home on

the open market with the local authority or the not-for-profit housing agency initially taking at least 40% stake, which they rent to the beneficiaries. The individual funds their equity stake through a local authority loan and committed to take out all the equity in the property over 25 years. They make payments on a mortgage for the part they own and pay rent to the local authority for the other part. Irish housing policy also aims to enhance the role of private rental sector by reforming tenancy legislation.

Comments / suggestions• Rent and own. May not be possible for slum dwellers and EWS/LIG in

India due to very low income. Secondly, acceptability of inclusive housing is a must for implementation

CASE STUDIES OF OTHER COUNTRIES contd

CHINA• The Chinese government provides old flats on rental at a very low price

and called 'low-rent housing’. Another scheme is PRH scheme which is the first attempt to use non-ownership housing to solve the housing problem of people, mainly who have low income.

China has introduced a series of tax exemptions and higher FSI for developers of public rental-housing projects.

Comments / suggestions• Is possible in India. Govt. of India is also thinking on these lines as 11

million houses lying vacant. Can help in removing slums but is only a temporary solution. Moreover maintenance of services & common areas to be taken care by Govt. Possible only for vacant EWS / LIG housing which may not be available.

INDIAN CASE STUDIES, mumbai

• Model 1: Higher FSI up to 4.00 with TDR application on Private Land: Of the total 4.00 FSI granted 3.00 FSI will be used for the rental housing; however TDR will be applicable for the non utilized balance FSI.

•  Model 2: Higher FSI up to 4.00 with no TDR application on Private Land: Of the total 4.00 FSI granted, only 1.00 will be utilized for rental housing; however TDR transfer benefits will not be available to the developer.

•  Model 3: Higher FSI up to 4.00 on MMRDA (Government land): Of the total 4.00 FSI granted, 3.00 will be utilized for rental housing while the remaining 1.00 will be utilized for commercial development.

MMRDA RECEIVED GOOD RESPONSE FOR THE SCHEME

Rental housing project is profitable generally on a larger piece of land with proximity to various amenities and transport .

comments/ suggestions• Model 1 ; Usability of FSI 3 to be ascertained with minor

change or relaxation of norms . Applicability of TDR on balance FSI is beneficial for the developer to earn revenue for subsidising rental housing. More no. of rental housing units will be obtained.

• Model 2 ; More beneficial for developer in respect of use of FSI 4 as he has to build only ¼ area for lower category & ¾ area for construction of higher category of houses. Less no. of rental housing units will be obtained ( 1/3 of Model 1)

• Model 3 ; Usability of FSI 3 to be ascertained with minor change or relaxation of norms . Commercial area in ¼ of plot will benefit the occupants of rental housing as well as the Govt. to earn revenue for subsidising more no. of rental housing units.

Aarusha Homes• Aarusha Homes is a registered private company that provides rental

housing solutions to low and middle income group customers for short term stays through formal hostels and paying guest accommodation . Mainly operating in south India.

• One of the few operators who are registered as a private company and manage rental housing formally.

• Properties are acquired from land owners on a lease period of 3-9 years, located in close proximity to the tenant’s place of work / study.

• Landlords and builders are consulted well in advance to achieve and execute a mutually agreed design and layout plan.

• 95-100 sq. ft area includes room, kitchen, toilet and other common spaces, security deposit of Rs. 1,000 and Rs. 3,000-6,000 monthly rent that includes Services like meals, property maintenance, laundry service, internet and hot water supply and Rs. 1,400-2,400 excluding meals.

• The company does not face any defaulters.

comments/ suggestions

• It is the most suitable model for single persons , working or students, as it provides facilities like meals, property maintenance, laundry service, internet and hot water supply in addition to affordable rent.

• The fact that the company does not face any defaulters proves it is a successful model.

• Govt. must promote it & also think about financing to some extent for its survival.

• can also be developed as hostels for back packers and tourists on short stays.

Case Study of Chandigarh• 1st scheme in India based on rent-to-own concept , to achieve slum free city of

Chandigarh by CHB in NOV. 2006• Developed 25,728 dwelling units in G+3 storey building . Government offered

land free of cost (370 acres) at eight different locations about 1-10 km away from beneficiary’s existing location of residence.

• Total project cost -10,215 million with two typical units of size of 270 sq. ft. and 370 sq ft.

• CHB managed to shift over 700 families from a slum site (Madrasi Colony) to Sector 56 within few days,

• Beneficiaries were shifted to transit shelters prior to allotment at monthly license fee of Rs. 600 per month and Rs 800 per month

After the allotment, beneficiaries to maintain their individual units only. Maintenance of common areas and resources along with overall maintenance of the blocks is shouldered by the CHB for first five years and thereafter by the Municipal Corporation.

Implemented seamlessly because of support of local leaders and political willingness of Chandigarh Housing Board

Model can be repeated in many other cities with suitable modifications to develop, that suit different types of cities for eradication of slums.

Sector-49C-Occupied Rental Flats Flats ready for allotment

Comments / SUGGESTIONS

CASE STUDY OF RAJKOT• Rajkot has about 3,000 small and medium scale

industrial units.• migrants are the main users of rental housing. • Types of Rental Housing in Rajkot are single room

tenements , part of house given on rent , full house given on rent

Households who can afford to build more than they require.

Households who have migrated out of the city and purchased own homes give out part of the house on rent to earn extra income to support family income.

Free land is encroached upon to build not just self-help housing but also rental housing.

Comments / SUGGESTIONS• Existing Rental housing appears to be

unorganized, whereas being industrial area many migrants are expected, more organised rental housing needs to be provided. • Encroachment of vacant land by public

for own house / rental housing needs to be addressed properly.

CONCLUSIONS• Rental housing project is profitable generally on a larger

piece of land with proximity to various amenities and transport .

• New rental law favoring both the tenant and the land-lord needs to be drafted.

• Rental housing may be successful with inclusionary approach. sufficient land availability. sufficient incentives to the developers .• Rent to own scheme is the solution to the problem of

affordable housing as well as eradication of slums.

CONCLUSIONS• For making rent to own affordable for EWS, it is proposed to

construct independent room only, with common toilet and common kitchen.

• Schemes like Aarusha homes to be promoted for migratory working employees.

• Converting slums on ULB land to rental housing could generate between 15 and 25 % of the ULBs’ revenue & will be useful for temporary migrants..

• Regulatory constraints to be reformed to enable fast approvals.• Last but not the least is the support of local leaders & political will,

without which success is not feasible, live example being CHB scheme.

THANK YOU