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Archaic law means no rooms to rent for migrant workers flocking to India's cities
September 19, 2017 / 1:29 PM / a month ago

Archaic law means no rooms to rent for migrant workers flocking to India's cities

Firefighters and rescue workers search for survivors at the site of a collapsed building in Mumbai, August 31, 2017. REUTERS/Shailesh Andrade/Files

MUMBAI (Thomson Reuters Foundation) - The collapse of a 117-year-old apartment block in a crowded neighbourhood in Mumbai last month highlighted the dismal state of affordable rental housing in Indian cities, even as tens of thousands migrate from rural areas everyday in search of jobs.

Thirty-four people including a newborn baby were killed when the six-storey building collapsed after heavy rains in a congested neighbourhood in the financial hub.

It was one of hundreds of old, decrepit buildings in the city under an archaic rent control law that has kept rents low, but led to buildings becoming dilapidated that tenants are reluctant to leave because of a lack of affordable options.

About a third of India’s 1.25 billion population lives in cities, with the numbers rising every year as tens of thousands of people leave villages to seek better economic prospects.

About a quarter of the urban population lives in informal housing, including slums because of a critical shortage of affordable housing, according to social consultancy FSG.

With little new affordable rental housing being built, millions of poor migrants are forced to live in unsafe and unsanitary conditions, in slums and other informal settlements where they may lack even basic amenities, analysts say.

“They have no choice,” said Satyanarayana Vejella, co-founder of Aarusha Homes, which operates dormitories for students and entry-level workers in four Indian cities.

“They cannot afford the high rents in the city, so they are forced to go to the informal sector, where the options may be dirty or unsafe. There are bound to be health, safety and sanitation issues that can impact productivity,” he said.

DISTORTIONS

The urban housing shortage is estimated at nearly 20 million units and seen as a major hurdle to faster economic growth necessary to lift millions of Indians out of poverty.

States at one time built social housing for migrant labourers including those working in textile mills and ports.

But as the population grew and urbanisation increased, the government gave up this role to the private sector.

Most states have also not amended decades-old rent control laws because of opposition from wealthy tenants who benefit from the caps on rent even on large homes.

While the law limits the pace of rent increases, it has exacerbated the lack of affordable housing and the immobility of low-income tenants who cannot afford to buy homes.

In Mumbai almost 95 percent of new residential construction between 1961 and 2010 was for private ownership, a sharp increase from preceding years, according to the IDFC Institute, a think tank based in the city of 20 million people.

“The rent control law contributes to the shortage in formal affordable housing and distortions in the land market,” said Vaidehi Tandel, an associate fellow at the IDFC Institute.

“There is very little new rental stock being added, and the existing stock is in pretty bad shape. So there’s little protection for the poor,” she told the Thomson Reuters Foundation.

A national urban rental housing policy, which commits to social rental housing for vulnerable groups including migrant workers and the urban poor, has remained a draft since 2015.

Instead, the government is pushing a goal to provide housing for all by 2022, with a focus on ownership through subsidised loans for buyers and incentives for builders.

Firefighters and rescue workers search for survivors at the site of a collapsed building in Mumbai, August 31, 2017. REUTERS/Shailesh Andrade/Files

That leaves low income workers stranded in unsafe buildings, and in slums and chawls - low-rise blocks with one-room homes - built more than a century ago to house workers.

Thousands of families still live in chawls in prime sites in Mumbai, paying a monthly rent of about 18-20 rupees (about 30 U.S. cents) each, a fraction of the market rate.

Many buildings are so dilapidated they must be knocked down and redeveloped, officials say. But residents oppose the move, saying they will be forced to pay higher rents.

RENTAL VOUCHERS

The government must intervene to create more social housing, said Vejella, who is on a task force on rental housing.

“Just as with the ownership push, the government must offer incentives to developers and subsidies to renters,” said Vejella, whose several attempts at providing rental accommodation for low-income workers failed.

Windows of various apartments of a residential building are seen in Dharavi, one of Asia's largest slums, in Mumbai March 18, 2015. REUTERS/Danish Siddiqui/Files

“Otherwise it can’t work except as a social enterprise”, and not as a for-profit business model, he said.

The affordable housing shortage comes as more than 11 million homes in India’s urban areas lie vacant, according to official data.

Owners may either be waiting for prices to appreciate so they can sell for a profit, or they may be reluctant to rent out for fear of squatter tenants, said Tandel.

“If these vacant houses are made available for rental housing, then some, if not most of the urban housing shortage can be addressed,” according to the draft rental housing policy.

The government earlier this year unveiled a rental voucher scheme for 27 billion rupees ($421 million), aimed at migrants and the urban poor in 100 Smart Cities, or cities that are being upgraded in a plan that activists say will not benefit the poor.

The voucher, which entails a direct transfer of cash to offset some or all of the rent, may be the most viable option, Tandel said.

“But the vouchers only address the demand side,” she said. “If there is no supply of rental housing, how will it work?”

The supply may be a while coming.

In Mumbai, thousands of rent controlled buildings have been classified as beyond repair and too dangerous to live in.

The building which collapsed last month was declared unsafe six years ago. The owner moved out in 2013 to accommodation provided by a trust that is redeveloping the area.

“I told the other tenants it was not safe, but they did not want to move,” said Hakimuddin Bootwala.

“They were scared they would have to pay higher charges if they moved. They paid with their lives,” he said.

($1 = 64.0383 Indian rupees)

Reporting by Rina Chandran @rinachandran, Editing by Astrid Zweynert @azweynert. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, women's rights, trafficking, property rights, climate change and resilience. Visit news.trust.org to see more stories.

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