Affordable housing projects should be exempted from tax to solve problem of vacant housing: Report
With Ahmedabad as a case examine, the report by Anant University on ‘Paradox of Vacant Houses in India’, stated the phenomenon of maintaining the home vacant was noticed throughout the board within the nation. But the examine discovered this to be extra acute within the reasonably priced section.
“India is one of the very few countries in the world where rental yields are abysmally low (1-3% for residential units) and is nearly one-third of the risk-free rate (about 5.8%). Capital appreciation is thus the preferred mode of return. Due to the low-interest rates and laws that are structured to favour tenants, a large number of owners prefer to keep the units vacant,” stated Dhaval Monani, the director of reasonably priced housing and an affiliate professor at Anant University.
To incentivise rental housing, affordable housing projects which have at the very least 30-50% rental models should be half of precedence sector lending, the examine stated. These projects should be made exempt from earnings tax and different taxes, it stated.
“Second homes that are vacant should be taxed at a higher rate than occupied units to discourage owners from keeping the homes vacant. Specifically, homes that are owned by individual owners and not occupied for more than six months a year should be taxed higher property tax and notional rent,” it stated.
The analysis discovered a plethora of causes that led to homes remaining vacant.
“The absolute amount of rent prices in these units are very low and so renting is not worth the bother for investors. Investments in affordable homes are often relatively modest and without any leverage. Investors prefer to keep the units empty as it gives them the flexibility to sell at any time. Due to these issues, the house remains vacant,” the report stated.
The college’s Anant Centre for Sustainability stated the analysis was undertaken in schemes for the economically weaker part, low earnings teams and the center earnings teams in Ahmedabad throughout 2019 to decide the explanations for vacant homes within the metropolis.
Primary analysis in Ahmedabad concerned in-depth interviews and focus group discussions with residents of 498 flats throughout 50 housing societies constructed by the personal sector and authorities after 2010, moreover interviews with resident welfare associations, brokers and builders.
“Real estate speculation has also contributed to distorting the price of housing, where the value was strongly inflated, providing to hinder the access of families to housing. Many investors bought houses intending to keep them empty, waiting for their appreciation, and then sell the properties to maximise the investment returns,” stated Monani.
According to Census 2011, of the 11 metropolitan areas in India, Mumbai, Bengaluru, Ahmedabad, Surat, Pune and Jaipur have the best numbers of vacant homes. In the Central National Capital Region (beforehand the Delhi Metropolitan Area), though Delhi had solely 9.68% vacant homes, Gurgaon and Ghaziabad had 21.12% and 12.58% vacant homes, respectively.
