Suggest amendments to Model Tenancy Act to address housing sector woes.

The model tenancy act is criticized for ignoring the ground realities. If suitable amendments are made it can be a great tool in addressing the housing sector woes of the country.

Focus on the upper end of the housing market

Even though it may sound counter-intuitive, focusing on the upper end of the housing market will make a difference in the lower end of the market.

Vacancies (housing kept vacant for various reasons) are higher in the upper segments of the housing market. For instance, across urban India, vacancy rates in urban areas are 10.1% while in slums it is 7.3%. One will see several empty apartment projects but rarely an unoccupied slum or low-income colony.

As a result, an effective implementation of the Act in the upper segments of the housing market will allow some of these vacant houses to enter the rental market and will relieve the massive amount of pressure and demand on the lower segments.

Commercial Tenancies and Residential Tenancies

Not just in spirit the act needs to differentiate between commercial tenancies and residential tenancies in letter.

The two markets are very different from each other. The commercial tenancies attract a lot more institutional investment and residential tenancies are largely held between individuals and households.

The needs of commercial tenancies and residential tenancies are entirely different. While commercial real estate underpins economic development, residential arrangements in urban areas offer the security of tenure and access to livelihoods, health and education.

Both cannot be dealt with in a similar manner as done under this Act. One cannot piggyback on another judicially.

Way Forward

Along with amendments to the act, the central and state governments must promote more investments in the affordable housing sector. The Central and State governments must develop schemes for the supply of formal affordable rental housing. The Act needs a wider ambit along with renewed efforts and investments to address the housing crisis.