As is well known, there are many poor households in urban in in developing economies, as well as in developed economies. For such households who cannot afford to own a home in the city, rental housing is a key approach to access sheltering services. Urban land is transacted in a highly skewed market. Most people in cities are, in fact, priced out of the land market, and may take generations to develop enough capital to make a purchase in order to make their home. Further, there's a strong supply side constraint on new housing, especially in developing countries due to lack of resources. This makes rental housing a way to enter into the city's economy without investing in real estate and housing. This is also particularly important for young households who are not yet ready to own a house. There are also many households that may not want to own a house in the city, think of migrants, for example, who are in the city to work and make a living. Why would they want to own a house when their work could take them to other cities and locations? There are also other trends in population such as students and single working professionals with housing assets in their places of origin. They would not at all be keen to own a house in the city, and would be accessing housing through the rental market. However, we must also acknowledge that rental housing can be exclusive, and even discriminatory as landlords tend to choose tenants on the basis of religion, class, and other socioeconomic filters. This rental housing serves as an access to housing for a multitude of types of individuals and households who cannot or don't want to own a house in a city. In some cases it is out of choice because of flexible housing option gives them room to maneuver. In other cases, choosing rental housing may be due to a lack of capacity to enter into the city's land and housing market. According to the 76 survey of the National Sample Survey Office of India conducted in 2018, one third of households in Indian cities lived in a hired accommodation. Think about that. This means that one in three households in urban India access housing justice in their locations through the rental market. This is an important report, and we'll keep using its findings to illustrate some key points around rental housing as we go along in this module. By all standards, rental housing is quite affordable, especially to the urban poor. Report suggests that renter households in India spending between 10-30 percent of their income on rent. Now, the global average affordable rent is considered to be 30 percent of a household's income. In India, this average is 15 percent across all income groups. The poor, in fact, are spending in the range of 10-20 percent, and only the rich spending in the range of 25-30 percent. The global average rent in India is just over rupees 3000, or $40 per month. Nearly half of all renter households live in small houses of about 25 square meters, and another third live in slightly bigger houses. These houses are smaller than houses that are occupied by their owners, but commensurate with the number of household members. By and large, there doesn't seem to be any major inadequacy in rented houses. The quality of materials that these houses are made of are quite comparable to similar houses that are occupied by their owners. All of this implies that rental housing is quite an acceptable option for households in terms of quality. Rental housing is also characterized by informality. This is endemic in developing countries such as India, with the vast majority of tenancies that are undocumented. While this may make it seem like that therefore would be a large amount of tenure insecurity, that is, the tenants would be liable for eviction very easily. Many scholars report that this is in fact not the case. They say that rental arrangements are underpinned by social relations that transcend the need for written agreements. This is a corollary effect of the kinship selection process that we spoke about earlier. What it does mean is that tenants are in fact in fairly secure conditions of tenure, and arbitrary evictions are rare. This was evidenced by some recent studies on tenants in informal settlements in the COVID pandemic induced lockdown in India. Most tenants reported that their landlords deferred rent payment until tenants were able to earn again. The biggest advantage renters seem to have over owners is in their commute distances. Data from our national surveys show that renters tend to travel far less for their work as compared to owners. This would follow logically, if one presupposes that housing choices flow from work choices, and not the other way around. In this way renters in India seem to have struck an interesting trade-off between access, affordability, tenure security, adequacy, and ease of access to work. In developing economies like India, there is a huge absence of the state in providing rental housing despite all its benefits, rental housing has nearly always slipped through the cracks in policy discourse, and for reasons ranging from lack of resources, managerial capacity, and also political expediency. Thus, it is important to acknowledge straight up that rental housing in India is provided almost only by individual landlords.
