The events and policy initiatives over the last few years – including the establishment of RERA, PMAY, Model Tenancy Law, and others – have laid the foundation for the development of rental housing. The missing piece of the puzzle was about making it viable and sustainable for the development and distribution process.

This is because the returns from residential real estate have remained very low. It fails to attract capital, or, long-term   operations-interest. This missing-part received a significant boost through the central government’s announcement of the creation of rental housing for poor urban migrants during the COVID-19 induced lockdown. During the lockdown, the migrant workers and economically weaker sections, frequently symbolised the plight, mainly because impermanent housing and the attendant economic woes forced them into reverse-migration.

This class of society has, for long, been the biggest latent demand-segment for such housing. However, high land costs in cities (coupled with overall project costs) have historically rendered any solution ineffective, as rent-paying capacities of the subject demand segment did not provide any buoyancy to project cashflows. Moreover, lack of suitable operational mechanisms for long-term, made it impossible to address this issue in the past.

The Affordable Rental Housing Complexes (ARHCs), Operational Guidelines July 2020 released by the Ministry of Housing and Urban Affairs, has now laid a roadmap. This is a remarkable attempt in this direction. We may say that this could prove to be a possible watershed development in the direction of sorting housing woes of urban poor. Here’s a paper that analyses the two models proposed by the aforementioned Operational Guidelines of July 2020; and presents a birds-eye view of the possible strengths and challenges.