INDIA BUSINESS WORLD - JULY 2006
THE MONTH THAT WAS...

DELHI SET TO HERALD RETURN OF RENT CONTROL

THE urban development ministry is planning to resurrect rent control, first in the Capital and thereafter, states willing, in all major metros. It proposes to fix monthly rents in a price band of Rs 4-9 per sq ft for residential properties and Rs 50-125 per sq ft for commercial spaces.

“The proposal is part of the draft Rent Control Act, which would act as the model for the nation,”.

Though real estate is a state subject, the urban development ministry regulates property-related issues in the Capital. The planned move to reintroduce rent control would have to first repeal the Delhi Rent Control Act 1995. The Delhi Rent Control Act of 1958 was sought to be replaced by the 1995 law, which provided for rents to be determined by prevailing demand-supply. However, thanks to powerful lobbies representing tenants who occupied prime commercial space paying next-to-nothing as rent, the Act was never notified.

Various agencies under the urban development ministry are working on rent models which would be viable for both property owners as well as tenants. The agencies have not decided concrete price points for commercial properties as yet.

“Comments have also been sought from Delhi government and Municipal Corporation of Delhi , which has done a census of organised spaces in the city. Their suggestions will also be taken into account,” a senior government official said. Even in some relatively low-cost locations of the national Capital, rents are as high as Rs 15 per sq ft right now.

According to sources, on the commercial front, there has been an upward pressure on rental value due to the recent demolition drive. “To help such shop owners, the ministry plans to set Rs 50-125 price band as rent,”.