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MUMBAI: Developers are being offered a slew of incentives to create rental properties in the Mumbai Metropolitan Region (MMR). From a complete income tax exemption on rental income for 10 years to a property tax exemption for 5 years and a concession in GST, the Maharashtra Housing Area Development Authority (Mhada) has also proposed an additional floor area index of 0.5 in Mumbai and 0.3 in MMR free of charge.On Wednesday, Mhada vice-president Sanjeev Jaiswal made a presentation of the draft rental housing policy to builders, inviting their suggestions to further improve the policy. Mhada has been appointed as the focal point for rental policy. He said Mhada has proposed a 50% reduction in development charges and the amount collected by the local body should be returned to the housing association as corpus for its maintenance.
To ensure the operation and maintenance of rental properties, the authority has strongly insisted in the policy on complete property tax exemption for the first five years and only 50% property tax for the next five years. It has also called for waiver of stamp duty and GST, besides capping interest on loans from financial institutions to the project at 6%.
The policy has also proposed a public-private partnership or hybrid model, as well as the government allowing long-term lease of land to enable rental housing. The draft policy also allows a developer to exit the rental housing project by allowing the tenements to be sold to the tenants or on the open market.
Jaiswal said Mhada drafted the Tenancy Act as well as the rules. A presentation will be made to the CM and Housing Minister and then presented to the legislature, he said. Jaiswal said there are currently 21 lakh vacant houses in Maharashtra, of which 44% are in the BMR. Mhada and Cidco, he said, are left with a huge unsold inventory. He stated that rental properties are intended for migrants, students, workers, working women, tourists, disaster-affected persons, project-affected persons, housing for the homeless and the economically weaker sections, and are a viable alternative to slums. The goal is to offer rental properties and later convert them to ownership, he said. One of the biggest problems with rental properties, he said, is the time it takes to resolve disputes in rental leasing, which is anywhere from 5 to 15 years, crippling the rental market and putting both the owner and tenant at significant risk. “About 67% of cases lasted longer than five years and only 10% of cases were resolved within two years,” Jaiswal said. He said it is proposed to set up a rental properties portal, which will provide information about all rental properties that will be made available under the policy.
The state government, in its housing policy, has proposed to create more rental properties in Mumbai and the Mumbai Metropolitan Region to meet housing needs as it works to make the region an economic growth hub by 2030. The state government has set a target of building 30 lakh houses in the region by 2030, and MHADA has been tasked with building 8 lakh houses, including rental properties.
On Tuesday, the state cabinet approved a cluster redevelopment policy for all Mhada layouts in the city larger than 20 hectares, removing the need for residents’ consent. Only permission from housing associations is required for the redevelopment.
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