COVID-19 lockdown shows why India needs social rental housing

Poor, low-income population needs rents below market rates

By Rajneesh Sareen, Mitashi Singh
Published: Monday 20 April 2020

The exodus of migrant workers — including children and the elderly — immediately after the announcement of the nationwide lockdown to curb the spread of the novel coronavirus disease (COVID-19), is a good reminder of the clamour for homes in our cities.

Migrant workers are deprived of shelter, food and wages.

The gathering of over 1,000 migrant workers in Mumbai and the hostility with which they were met, was one instance of the kind of distress migrants faced.

India is currently suffering a reverse migration trend where several thousands of workers, facing a long-term loss of their livelihoods, are undertaking long journeys to return home to their villages and towns, in several cases undertaking journeys of hundreds of kilometres on foot

State governments — including those of Odisha and Delhi — requested landlords to waive or defer rents for poor tenants in the wake of the migrant crisis.

This was done as state governments do not have adequate shelter for thousands of migrants. Delhi, for instance, is making efforts by using their infrastructural capacity — including temporary shelters in school — to house 18,478 people.

The situation brings to the surface an important housing typology, amiss from the national and state-level housing regime: Social rental housing (SRH), where rent is set at a level below market rates to make it affordable for the poor and lower-income segment.

State governments currently prioritise the construction of houses with a view to hand them over to beneficiaries.

The Pradhan Mantri Awas Yojana – Urban (PMAY-U) is India’s attempt to shorten the housing gap in the country. PMAY-U is implemented through four verticals:

  • In-situ slum redevelopment
  • Beneficiary-led construction and enhancement
  • Affordable housing in partnership
  • Credit-linked subsidy scheme

The focus on government-run SRH is missing from the flagship scheme.

Better late than never

Policy efforts — including the 2007 National Urban Housing and Habitat Policy that emphasised the adoption of a multi-pronged approach to increase the urban rental stock of India — are present for SRH.

A Union Ministry of Labour and Employment directive also asked states to create housing stock for construction workers utilising the Construction Workers Welfare Fund.

States are slowly and gradually beginning to intervene in the SRH segment. Such interventions, however, have a long way to go.

The Mumbai Metropolitan Region Development Authority, for instance, is constructing around 2.5 lakh SRH units in eight urban local bodies using public-private partnership arrangements.

The Odisha Building and Other Construction Workers Welfare Board, in partnership with the state’s labour department, constructed dormitories for migrant construction workers using funds collected as labour cess.

Roadblocks like post-occupancy operations and maintenance, lack of associations to manage affairs of rented clusters, far-off locations and designs that affect liveability adversely are still present.

NURHP: an important puzzle-piece

Rental housing is usually not lucrative for the private sector. To increase its supply, it requires innovative financing mechanisms or a strong push from the government in terms of incentive packages to pull market interest.

The draft National Urban Rental Housing Policy (NURHP), drawn by the Union Ministry of Housing and Urban Affairs, was released in 2015 to address this challenge.

The draft identifies different kinds of housing demands, including:

  • Social rental housing for homeless and urban poor
  • Need-based rental housing for migrant labour, single women, single men and students
  • Market-driven rental housing for people who are tenants by choice, including upper income segments and government employees

The draft suggests various models that deliver economic feasibility of different types of rental housing, like the rent-to-own scheme, under which the beneficiary gets a housing unit on a leased basis for a fixed number of years.

The beneficiary pays a monthly instalment that contains a certain percentage of rent and the rest as thrift.

When the amount paid reaches a certain percentage (around 10 per cent or as decided) of the total unit price, the house will be registered on the beneficiary’s name. The beneficiary gets full ownership on 100 per cent payment.

The benefit of this scheme is that the tenants feel secure as the landlord is the government.

Public welfare measures will reach faster to these beneficiaries, given the COVID-19 outbreak.

There are no contractual obligations to buy the unit in question either. Chandigarh implemented a rent-to-own scheme, while it there are attempts to promote it in Andhra Pradesh.

COVID-19 clearly brought to the surface the fact that there is a need to shift from static policies to be able to cater to kinetic demands. Social rental housing is one such demand.

The NURHP needs to be notified with urgency. The central government has to take initiative and facilitate implementation of SRH at par with mainstream housing schemes.

States need to follow and prioritise this, given the migrant crisis that is unfolding at this time.

States will need to lay out clear guidelines to avoid the roadblocks that are generally faced.

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