Mumbai: In a major push to expand rental housing across the Mumbai Metropolitan Region (MMR), the Maharashtra government is offering an extensive package of incentives for developers. The proposed benefits include a 10-year income tax waiver on rental earnings, a five-year exemption from property tax, concessions in GST, and free additional floor space index (FSI) of 0.5 in Mumbai and 0.3 across the rest of the MMR.
On Wednesday, Maharashtra Housing Area Development Authority (Mhada) vice-president Sanjeev Jaiswal presented the draft rental housing policy to developers, inviting their feedback to further refine the framework. Mhada has been designated as the nodal agency for implementing the policy.
Jaiswal noted that the draft includes a 50% reduction in development charges, with the amount collected by local authorities proposed to be returned to housing societies as a maintenance corpus. To support long-term operation and upkeep, the policy advocates for a complete property tax exemption for the first five years, followed by a 50% waiver for the next five. Additional incentives include waivers on stamp duty and GST, as well as a cap of 6% on interest rates charged by financial institutions for project funding.
The policy also proposes flexibility in development models, allowing public-private partnerships, hybrid structures, and government-sanctioned long-term land leases to facilitate rental housing. Developers may also choose to exit projects by selling units either to existing tenants or openly in the market.
Jaiswal added that both the Rental Act and related rules have been drafted and will soon be presented to the chief minister, the housing minister, and subsequently to the legislature. He highlighted a significant mismatch in the housing market, pointing out that Maharashtra has 21 lakh unoccupied homes — 44% of which are in MMR — while agencies like Mhada and Cidco continue to hold substantial unsold inventory.
Rental housing, he emphasized, is critical for migrants, students, labourers, working women, tourists, disaster-affected individuals, project-affected families, the homeless, and economically weaker sections. It also serves as a more sustainable alternative to slum development, with the long-term aim of transitioning rental units into ownership.
One of the major obstacles to a robust rental market, Jaiswal said, is the prolonged dispute resolution process. Rental litigations can take 5 to 15 years to conclude, leaving both landlords and tenants vulnerable. “Nearly 67% of cases extend beyond five years, while only about 10% conclude within two years,” he said. To address this, the draft policy includes the creation of a dedicated rental housing portal to provide transparent information on all units available under the scheme.
As part of its broader housing strategy, the state aims to create extensive rental stock across Mumbai and the MMR to accommodate growing demand while transforming the region into a major economic hub by 2030. The government plans to build 30 lakh homes by then, with Mhada responsible for delivering 8 lakh units, including rental housing.
In a related development, the state cabinet on Tuesday approved a cluster redevelopment policy for all Mhada layouts larger than 20 acres, removing the requirement for individual resident consent. Only approval from housing societies will now be needed to initiate redevelopment.
