Rajiv Awas Yojana: builders not too keen on rental housing

The Rajiv Awas Yojana (RAY) announced in the 2009 budget is one of the United Progressive Alliance government’s initiatives aimed at improving living conditions for the urban poor through the construction of housing for the so-called economically weaker sections (EWS), a measure aimed at reining in the relentless spread of slums across India’s urban landscape.

A critical part of the programme, amounting to one-fourth of such projects, is developing rental accommodation. But private builders aren’t too keen on the idea, since the returns on selling a property are much higher than on renting it.

In a typical EWS category housing project, the government allows a part of it to be developed as commercial space along with the rental housing. The project’s success depends on who will manage it and set the eligibility criteria for those seeking to rent homes, she added.

Developers blame poor incentives and low returns for the lack of enthusiasm.

“Such projects are taken up under the purview of state development authorities, which are not comfortable sharing more incentives,” said Manoj Goyal, senior vice-president, Raheja Developers Ltd, a New Delhi-based real estate firm. “Moreover, authorities should not invite bids for such projects, as the tendering process increases the cost of the project while there is poor return on the final product.”

Read more at http://www.livemint.com/2012/05/28225901/Rajiv-Awas-Yojana-builders-no.html

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One thought on “Rajiv Awas Yojana: builders not too keen on rental housing

  1. salmansanto August 8, 2012 at 8:15 am Reply

    Low turnkey rental home prices and low rental properties interest rates make this a great time to become an investor.

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