One way of looking at the operation of Rent Control Act in India is to point to the dilapidated housing stock and overcrowding living conditions in inner city areas in many urban areas. In the city of Mumbai, a survey in the 1960’s identified about 20,000 privately owned buildings in a dangerous condition giving shelter to about 400,000 households, of which 16,000 buildings were constructed prior to the 1920s.
A vast majority of these families were living in single tenements with common amenities, and without the benefit of any maintenance by the landlord. In an annual year the collapse of a few buildings during monsoon lead to injuries and causalities and thus the dispossession of tenants became commonplace.
In Delhi, a larger part of the old rented housing stock, styled as ‘katras’ in the walled city of Delhi have been declared as slum areas. The density of population was much lower in other cities, but there also the stagnant rents was a dampener and discouraged proper maintenance of the premises by the owner of the property. The prevalence of rents at less than the market price does not actually lead to excessive use of space by the tenant households, as densities remain high because of the small size of the units and the large size of the families residing in such dwelling units.
The important point to note in the case of properties under rent control is that the low returns to the landlord do not lead automatically to a reduction in the number of tenant units, and the supply declines only if the property suffers a collapse due to a slump in the property market or an accelerated obsolescence. When investing in an apartment in Kochi all the above said factors need to be given importance.