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Affordable Rental Housing in urban areas to economically weaker sections

The COVID-19 pandemic-induced lockdown resulted in a mass reverse migration of urban migrants. The heart-wrenching plight of the urban migrants highlighted the deep-rooted problem of access to safe and affordable housing spaces in urban areas.

Encouraging ownership of housing is crucial. However, non-ownership housing is equally essential and pragmatic for urban areas. It is observed across the country that housing policies are skewed towards ownership-based housing. However, there are alternative and similarly relevant tenures that need attention. Migration and economic activity are intertwined. Non-ownership housing is vital for both horizontal and vertical mobility of people as it allows them to access suitable accommodation without buying it. Therefore, emphasis on the supply of rental housing is crucial. It also plays a significant role in the objective of housing for all.

India’s Non-Ownership Housing Scheme

Urban areas attract seasonal urban migrants who work in the construction and industrial sector. Most of these areas are concentrated and aggregated and require access to rental housing. Many migrant workers and urban poor stay in slums, informal settlements, and surrounding urban areas. In the absence of a proper housing supply, there is a large-scale mushrooming of ill-planned, low-quality housing. Local governments often struggle to provide basic civic infrastructure for these areas, leading to poor housing conditions. Migrants generally prefer to stay closer to their place of livelihood and near their community network. There is a need for rental housing closer to the workplace at affordable rates to address the need of this segment.

The Ministry of Housing and Urban Affairs (MoHUA) has initiated Affordable Rental Housing Complexes (ARHCs), a sub-scheme under Pradhan Mantri Awas Yojana-Urban. The target group for ARHCs is urban migrants, economically weaker sections, and low-income groups. The government is promoting ARHCs by ensuring special provisions. It includes 50 % additional FSI without extra payment, single window clearance, relaxation in existing rent control laws, etc. Migrants generally prefer to stay closer to their place of livelihood and near their community network.

The government has designed 2 implementation models of the ARHC scheme:

1. Model 1 – Utilising existing government-funded vacant houses to convert into ARHCs through Public Private partnerships or by Public Agencies

As the name suggests, the government seeks to utilise the existing inventory of vacant houses to address the demand for non-ownership housing. It has identified over 80,000 vacant homes owned by public agencies/enterprises across the country. The aim is to repair these houses and fulfill the infrastructure gap such as electricity, water, sewer, sanitation, road and related works. Both public and private agencies can participate in the management of ARHCs. The initiative wants to push for investment opportunities and promote entrepreneurship in the rental housing sector.

2. Model-2: Construction, Operation, and Maintenance of ARHCs by Public or Private Entities on their vacant land

The model seeks to promote rental housing construction on vacant land by public and private agencies. It aims to increase the supply of rental housing to meet the excess demand resulting in over and above Model-1. It promotes proactive participation from public and private entities in the provision of rental housing. It will propel new investment opportunities and promote entrepreneurship in the rental housing sector by encouraging private and public entities to efficiently utilise their vacant land for developing ARHCs. The government has given several incentives such as exemption from income tax and GST on any profits from these operations, offering lower interest rates for project finance, loans, etc.


1) Existing government-funded housing complexes will be converted into ARHCs through concession agreements for 25 years. Special incentives will be offered to private and public entities for developing housing complexes on their own land for 25 years.

2) ARHCs will create a new ecosystem in urban areas, making housing available at affordable rent [for migrants] close to their places of work and will cut down unnecessary travel, congestion and pollution.

3) Investment on ARHCs is expected to create new job opportunities. Government-funded vacant housing stock will be converted into ARHCs for economically productive use. The scheme would create conducive environment for entities to develop ARHCs on their own vacant land, which will enable new investment opportunities and promote entrepreneurship in rental housing sector.

4) Under the initiative, existing vacant government funded housing complexes will be converted to ARHCs. Further, special incentives like use permission, 50 per cent additional floor area ratio or floor space index and tax relief will be offered.

5) In case of government-funded complexes, concessionaire will make the complexes livable by repair/retrofit & maintenance of rooms and filling up infrastructure gaps such as water, sewerage, sanitation and roads. The concessionaire will be selected by states and Union territories through transparent bidding.

6) PMAY (Urban) was launched in 2015 to provide affordable housing for all by 2022 across all urban areas.

7) The initiative was announced as part of the Aatma Nirbhar Bharat economic package by the Finance Minister in May in view of the mass exodus of migrant labourers and the poor back to their villages from urban centres post the announcement of the nationwide lockdown.

CA Harshad Shah, Mumbai

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