In order to push rental housing in urban areas to
meet the growing needs of nomad population, the central government has proposed
to give tax relief to home owners & tenants.
The draft Rental Housing Policy has
proposed some tax-reliefs, based on the fact that renting of houses is
construed as a ‘commercial’ activity, which increases property tax & make
the property susceptible for service taxes.
"Higher outflow due to commercial treatment
deters the growth of rental housing," a report on the issue said that has
been circulated among states for their feedback.
The report also talks about the fact that the
Income Tax Act provides exemption of tax deduction for House Rent Allowance
(HRA) for an employee, which is about 40% on the basic salary.
"It is estimated that the urban poor might
be paying monthly 30% of their income as house rent without any incentives. The
share is much higher in the case of people with less salary in comparison to
those who are better paid," a ministry official was quoted as saying.
Arguing for a robust Rental Housing Policy, the
document has suggested different ‘need based rental housing’ models to address
various housing needs for different migrating segments of the population, like
students, working people & community servers.
The draft policy also highlights that while there
is huge housing shortage in relevant areas, there are massive stocks of vacant
houses, elsewhere. According to the 2011 Census, 11.09 million houses are
vacant in urban areas.
"While exact reasons for the vacant properties
are hard to ascertain, it is felt that low rental yield, fear of repossession,
lack of incentives etc. are the possible reasons. If these vacant houses are
made available for rental housing, then some, if not most of the urban housing
shortage, could be addressed."
The policy suggests to states to recognise that
many urban households live in rental & shared housing & hence they
should consider renting to be one of the diverse ways to develop housing
conditions.
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