Every Mumbaikar does not have the financial position to own a house and dwell in it. As a result, there is a never diminishing demand for rented houses and office spaces in the city of Mumbai.
In case of rented houses, the tenants were offered protection under the Rent Control Act. Earlier, it was a possibility to get a decent sized apartment for rent at a very reasonable or probably cheap rate.
However, a state housing department is planning to increase the rents paid by tenants for the properties in Mumbai, in a big way. The government is planning to collect higher proportions of rent from people who live or trade in comparatively larger spaces. The limit decided is over 862 sq. ft. for residential purposes and over 500 sq. ft. for commercial properties. This may affect around 5 lakh people in the city. When compared to fixed rents being paid by the tenants, the landlords would now be able to charge 50 % of the market value of rent for first 3 yrs and then, charge higher rents for subsequent years. For senior citizens, the rent may be as much as 15 % of their income. This may increase the rent rates for Mumbai properties manifold, and bring a change to the real estate in Mumbai.
On one hand, the landlords have acquired the properties long back, when the property rates were as cheap as peanuts, and on the other hand, they argue that the rents received are very low and there is no money to pay for maintenance and repairs of the property. The summation of rent received by the landlords over the years would have surely helped them, recover the amount they had paid to acquire the property. The rents received now, and the resale value in future, is all a profitable avenue to the landlords. In addition to this, burdening the tenants with higher rents is only going to create a one sided and a win – lose situation.
The areas of Mumbai that will be most affected by the enforcement of this law are – Marine Drive, Virar, Nariman Point, Colaba, Mira and Malabar Hill. The upcoming projects, coming up in Mumbai may face mixed reactions. On one hand, people may consider investing in property in Mumbai as, it will get difficult for people to lend their houses on rent due to, an upsurge of the rental bills. On the other hand, the demand for new residential projects in Mumbai may increase if people invest in property in anticipation of higher rental incomes.
People may now opt for guest houses rather than staying in a flat in Mumbai. Though people might have to compromise on the amenities available, it will not dig a big hole in their pockets. Staying in Studio apartments will now become a dream as its affordability has become a million dollar question.
The government has to take sincere efforts to realize the pros and cons of this legal enforcement. A specialized team of experts is planning to be formed for the same, which will come out with an appropriate decision within a span of 2 weeks. The government needs to be more empathetic and understand the needs and concerns of the masses. Being more considerate to the richer class will only result in a unilaterally beneficial law. The Mumbaiites may have to pay higher rents for 1 BHK or 2 BHK houses in Mumbai.