Maharashtra Government Offers Incentives to Developers for Rental Housing
The Maharashtra government is planning to offer a range of incentives to developers to boost rental housing stock in the state. These incentives include free additional Floor Space Index (FSI), lower interest rates on loans, property tax waivers, and nominal stamp duty and registration fees.
Rental HousingMaharashtraIncentivesDevelopersMhadaReal Estate MaharashtraNov 20, 2025
The consultation was organized by Mhada, which has been appointed as the nodal authority for the implementation of the rental housing scheme in Maharashtra, based on the ‘State Housing Policy-2025’. Jaiswal emphasized that rental housing, which was often overlooked in the past, is now a key component of the new housing policy.
Some of the incentives offered to developers include:
- Additional 0.5 FSI and 0.3 FSI in Mumbai and the Mumbai Metropolitan Region, respectively, over and above the permissible FSI.
- A 50% concession on development charges.
- 100% property tax waiver during the first five years and 50% waiver for the next five years.
- Nominal stamp duty and registration fee of ₹500.
- 100% goods and services tax (GST) waiver and income tax exemption on the rent earned from housing stock.
- Loans at 6% interest.
- Accelerated depreciation benefits on capital investments in rental housing projects.
According to the draft rental housing policy shared with participants at the consultation, government land may be leased out to private developers to generate the housing stock under the scheme. Both the tenant and developer would be permitted to exit the scheme by outright purchasing the housing unit.
Rental housing stock may also be created by converting unsold Mhada flats and government buildings into hostels and studios, amalgamating public plots, prioritizing the redevelopment of old buildings, utilizing transit-oriented development, converting inclusive housing units into rental ones, and deploying modular as well as prefabricated units for rapid and flexible rental accommodation.
The policy proposes three tenurial categories for rental homes: short-term (one to eight months), medium-term (eight to 36 months), and long-term (permanent).
During the discussion, Niranjan Hiranandani, founder and chairman of the Hiranandani Group, suggested that amending the Charitable and Religious Trusts Act and the policy on Corporate Social Responsibility (CSR) would boost rental housing stock creation. ‘If the Act is amended, like the earlier decades when homes were built by private trusts, the same can be done. Also, CSR funds can be routed towards the creation of rental homes. Benefits may also be provided to corporate houses and educational institutions which create rental housing units for their employees and students,’ Hiranandani said during the consultation.
These suggestions were noted by Jaiswal, who is likely to share the same with the political brass. Hiranandani also emphasized the need to tap into different kinds of rental homes, such as affordable living, service apartments, co-living, students’ hostels, homes for construction and industrial workers, community housing for the IT sector, and long-term transit housing.
Rajan Bandelkar, president of the National Real Estate Development Council (NAREDCO), suggested that rental housing projects should be allowed in green zones and incentives should be extended to developers. However, Jaiswal did not respond positively to this suggestion.
Frequently Asked Questions
What incentives are being offered to developers for rental housing in Maharashtra?
The incentives include free additional Floor Space Index (FSI), loans at lower interest rates, property tax waivers, and nominal stamp duty and registration fees.
How will the government generate rental housing stock?
Government land may be leased out to private developers to generate the housing stock. Additionally, unsold Mhada flats and government buildings may be converted into hostels and studios, and modular and prefabricated units may be deployed for rapid and flexible rental accommodation.
What are the three tenurial categories for rental homes proposed in the policy?
The policy proposes three tenurial categories for rental homes: short-term (one to eight months), medium-term (eight to 36 months), and long-term (permanent).
What suggestions were made by Niranjan Hiranandani during the consultation?
Niranjan Hiranandani suggested amending the Charitable and Religious Trusts Act and the CSR policy to boost rental housing stock creation. He also proposed using CSR funds for rental homes and providing benefits to corporate houses and educational institutions that create rental housing units.
What was Rajan Bandelkar's suggestion regarding green zones?
Rajan Bandelkar suggested that rental housing projects should be allowed in green zones and incentives should be extended to developers. However, this suggestion was not positively received by Mhada.
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