Having one of the highest rentals in the state

The legal amendments to the Rent Control Act have been made with a view to:
1.Exempt houses constructed in properties after a particular period for 10 years or more
2.Exempting existing properties earning rent above a particular limit
3.Streamlining the legal procedures for settling disputes
4.Provide periodic increases in rent to allow a provision for the increasing cost of maintenance.

However, there are doubts as to whether these amendments by themselves would provide greater access to rental housing for the lower income groups at affordable rates. The provision for increase in rent every three years has to be based on careful indexation to correspond to the actual cost of maintenance. The exemption of limit of rentals for houses should not be kept too high, as otherwise it may not make any significant difference to the controlled market.

Finally, the exemption to new construction for 10 years may not lead to increased supply of rental housing for the lower income groups, and the additional supply of rental housing may in fact go to those groups which can either afford ownership housing or rental premises even at existing high rates in Ernakulam. There is a view that the problem with the present Act is not with the low rents but with the eviction of a tenant even for legitimate repossession, and the landlord’s perception of risks associated with letting out the house.

It is also forcefully argued that Rent Control Act is not the only cause of the low rate of returns from rental housing. The rates of return need not be high even when the rents are uncontrolled. It is felt that the high cost of housing and fiscal policies deter private investment in rent housing. Even in such a situation for luxury Apartments Ernakulam district has one of the highest rentals unseen anywhere else in Kerala.