Rental housing is system of renting the house to tenant by the land lord. It is more common in the urban area due to heavy population burden with limited resources. 

The development of a vibrant rental market is important in order to take advantage of the massive spurt in demand for rental spaces due to economic growth and migration.

A regulated rental market would ensure that –
1. Interests of both renter and rentee are protected in transactions.
2. Provide verified services and protect either party from undue harassment and litigation.
3. Ensure earlier adoption of technology in the rental space (e-rental agreements, portals like magicbricks etc to find rental accommodation). 
Rapidly urbanizing countries are typically infrastructure strained. This problem is particularly acute in the urban housing infrastructure sector. In order to accommodate migration due to urbanization and to provide accommodation for those without the incentive or the finances to purchase homes in urban regions, a vibrant rental housing ecosystem becomes critical to urban growth.

Since the India is on the move due to more labour mobility, what Urban India needs is the flexibility in Accommodation facilities. To this the rental housing is the best suit.

Merits of Rental Housing –

1. SUITABILITY TO MIGRANTS –

It solves the housing crisis of many families, especially migrants. Rental housing fits into the economic plans of families much better than buying the houses.
It helps provide more choices for economic and spatial mobility to migrants.

2. LABOUR MOBILITY –

Rental housing allows greater labour mobility – the constraints to mobility are minimized as the access to rental housing increases.

3. FLEXIBILITY –
   It suits the income volatility and risk profile of the workers in the Informal sector.

Majority of the people on the move are middle or low income group, renting helps them avoid maintenance costs, big down payments, real estate taxes and same time provides access to most amenities.
With Flexibility to Downsize, Fixed Rent Amount, Lower Insurance Costs, Lower Utility Costs rental housing meets the needs of most people.

4. HOSTELS –

With the growing number of jobs in IT- sector , growing migration of students and other young professionals, they generally prefer hostel or dormitory for accommodation.

5. INCOME PROSPECTS –

Income from Renters – provides with a direct income stream.
Income from Property Value Growth – gain from an increase in the property value over time due to changing demands in the area, even if the property doesn’t undergo any changes.

Shaky Market Creating More Renters, Decreasing Property Value affects renters substantially less.

6. OPTIMUM LAND USE –

Ensures optimum use of city’s urban spaces.

Concerns –

1. Rent Control Acts (RCAs) – have disincentivized landlords from renting out their houses. It regulates the rents and makes evictions difficult .
2. Low rental yields offer little incentive to undertake the risk of renting apartments.
3. When there is no investment in maintenance of the rental property they go beyond repair and become dead space.

4. Lack of formalisation and regulation of rental household ecosystem and creation of system of chawls and slums.
5. Prejudices, discrimination and ghettoisation of rental spaces with apprehensions against renting to foreigners, some religions especially Muslims, bachelors etc.

6. Safety and security are the challenges before the government because there are no strict criteria or regulations for the process of renting.

Way forward –

1. Repealing RCAs – it will incentivise landlords by making renting economically viable. Plus a fast-track court mechanism to handle eviction disputes can potentially reinvigorate market confidence in rental housing.
2. Enabling Environment – To bring the vast available stock of vacant housing into the rental market, there is considerable space for the emergence of rental management companies (RMCs) that can professionally manage and rent out properties on behalf of the owners.
3. Policy on protection of interest of consumer without affecting the economic interests of the Renters as well as security concerns. With Aadhaar seeding in full swing, it becomes easy for both parties to verify credentials before entering into transactions.

CONCLUSION –

For India to grow at faster rate we need more fluid mobility of labour force. For this to happen there is a need for development of vibrant rental market for urban India.

Technological innovations should be used to enhance the rental ecosystem in order to achieve urban socio-economic growth.