Economic Survey 2017-18 has argued a case for Rental housing which it feels is important for both horizontal and vertical mobility as it allows people to access suitable housing without actually having to buy it. The Survey says across the income spectrum, rental housing is an important foothold into a city for new arrivals, until they are able to, or choose to, purchase their own homes. For rural migrants, in particular, whose financial portfolios may already be tied up in land and livestock, it is access to shelter that is more important than investing in another lumpy asset that is subject to local market risk.
The Survey has also pointed out that the share of rental housing has actually been declining in Indian cities since independence from 54 per cent in 1961 to 28 per cent in 2011. Although most parts of the country have witnessed a decline in the share of rentals, it is not uniform. While some regions have shown sharp fall, in case of some other regions fall is moderate.
As a proportion of all housing, renting accommodation is more prevalent in urban areas than in rural. According to the 2011 Census, the share of households living in rented houses was only 5 per cent in rural areas, but 31 per cent in urban areas.
In many countries, including India, home ownership is encouraged as part of socioeconomic policy. While there are good reasons for encouraging home ownership, it must be recognized that the rental market is also an important part of the urban eco-system. “Rent control, unclear property rights and difficulties with contract enforcement have constrained the market in India in recent decades,” the Survey suggests. The Survey feels that these problems need to be resolved in order to allow horizontal and vertical mobility as well as to address a related issue – high vacancy rates.