Maharashtra Offers Incentives to Developers for Rental Housing
The Maharashtra government is planning to offer a series of incentives to developers who generate rental housing stock, including free additional Floor Space Index (FSI), lower interest rates on loans, property tax waiver, and nominal stamp duty and registration fees.
Rental HousingIncentivesDevelopersMaharashtraMhadaReal Estate MumbaiNov 20, 2025
The incentives for developers include free additional Floor Space Index (FSI), loans at lower interest rates, property tax waiver, and nominal stamp duty and registration fees. These benefits aim to encourage the development of rental housing units, a critical component of the new housing policy of Maharashtra.
One of the key components of the new housing policy is rental housing, which has been overlooked in the past. Jaiswal highlighted several incentives in his presentation, such as an additional 0.5 FSI and 0.3 FSI in Mumbai and the Mumbai Metropolitan Region, respectively, over and above the permissible FSI. Developers will also receive a 50% concession on development charges, a 100% property tax waiver during the first five years, and a 50% waiver for the next five years. Other benefits include nominal stamp duty and registration fees of ₹500, 100% goods and services tax (GST) waiver, income tax exemption on the rent earned from housing stock, loans at 6% interest, and accelerated depreciation benefits on capital investments in rental housing projects.
According to the draft rental housing policy shared with participants, government land may be leased out to private developers to generate the housing stock under the scheme. Both the tenant and developer would have the option 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 and 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 consultation, Niranjan Hiranandani, founder and chairman of the Hiranandani Group, suggested amending the Charitable and Religious Trusts Act and the policy on Corporate Social Responsibility (CSR) to boost rental housing stock creation. Hiranandani proposed that if the Act is amended, similar to the earlier decades when homes were built by private trusts, the same can be done. Additionally, CSR funds can be routed towards the creation of rental homes, and benefits can be provided to corporate houses and educational institutions that create rental housing units for their employees and students.
Hiranandani also emphasized the need for 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. These suggestions were noted by Jaiswal, who is likely to share them with the political brass.
Rajan Bandelkar, president of the National Real Estate Development Council (NAREDCO), suggested that rental housing projects should be allowed in green zones and that incentives should be extended to developers. However, Jaiswal did not respond positively to this suggestion.
Overall, the Maharashtra government's initiatives aim to address the growing demand for rental housing and provide developers with the necessary support to meet this need.
Frequently Asked Questions
What are the main incentives offered to developers for rental housing in Maharashtra?
The main incentives include free additional Floor Space Index (FSI), lower interest rates on loans, property tax waiver, nominal stamp duty and registration fees, and income tax exemption on rent earned from housing stock.
How will the government land be utilized for rental housing?
Government land may be leased out to private developers to generate the housing stock under the rental housing scheme. Both the tenant and developer can exit the scheme by outright purchasing the housing unit.
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 to boost rental housing stock creation?
Niranjan Hiranandani suggested amending the Charitable and Religious Trusts Act, routing CSR funds towards rental home creation, and providing benefits to corporate houses and educational institutions that create rental housing units.
What was the response of Mhada's COO to the suggestion of allowing rental housing projects in green zones?
Mhada's COO, Sanjeev Jaiswal, did not respond positively to the suggestion of allowing rental housing projects in green zones, as proposed by Rajan Bandelkar, president of NAREDCO.
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