Rents to go high for South Mumbai pugree residents

There's bad news for tenants residing in South Mumbai's old buildings under the pugree system - where a tenant is not the sole owner of a flat and a part of the flat belongs to the landlord - as the draft housing policy is likely to change.

Rent control: Under the pugree system, a tenant is not the sole owner of a flat and a part of the flat belongs to the landlord. (Left) Buildings under the pugree system in south Mumbai. File pic

As per the policy (yet to be released), the government has decided to amend the Maharashtra Rent Control Act 1999 iand make the tenant pay rent equal to 30 per cent of his/her annual income to the landlord.

Ground realities
According to the government, one of the key factors that have led to the dilapidation of old and cess buildings is the provisions of the Maharashtra Control Act, under which rents stood frozen since 1948.

As per the proposed policy, the government will amend the statute to exempt all commercial establishments occupying more than 46.5 sq mt (500 sq ft) from protection under the Maharashtra Rent Control Act.

Further more, all residential tenants occupying more than 80 sq mt (860 sq ft) will also be excluded from protection under the Act. Ergo, for these flats and commercial outlets, a tenant occupying more than 46.5 sq mt of commercial area and 80 sq mt residential area, shall however be entitled to continue to occupy the rented premises so long as he/she agrees to pay the market rent.

More rent
The government has also decided the rent that the tenants must pay to the landlord. To ensure that the change does not unsettle the tenants, for the first three years they will be liable to pay only 50 per cent of the market rent, and 100 per cent of the market rent from the fourth year onward, subject to the clause that if the market rent is more than 30 per cent of the annual income of the tenant, then in such a case, the tenant will be liable to pay rent equal to only 30 per cent of his/her annual income to the landlord.

In the pugree system, a tenant is not the complete owner of a flat and a part share of the flat belongs to the landlord. An aerial view of Gaiwadi in South Mumbai. file pic

In such a case, senior citizens will be liable to pay only 50 per cent of the market rent or 15 per cent of annual income, whichever is lower.

All such buildings/occupants/ landlords will not be required to pay repair cess and Maharashtra Housing and Area Development Authority (MHADA) shall not be responsible to maintain such buildings. Further more, it will be the sole responsibility of the landlord to maintain all such buildings and keep them in good repair and condition. Failure by the landlord to do so will attract penal provisions including negligence as contained in the Indian Penal Code.

Voices
Tenant associations claim that this move will affect nearly 25 lakh people, as more than five lakh families are directly going to be affected because of it. Vidula Warawdekar, a resident of a pugree system building, and a member of an entity called Action Committee of Tenants, said, "It's not just five lakh families who will be affected; the ramifications will be for more than these people. The government's decision is just arbitrary, how can it decide such a thing? It seems that it wants to help certain influential people. This will bring us out on the streets, paying 30 per cent of our salary as rent, 33 per cent as income-tax, leaving us with less than 40 per cent for ourselves to run the house, educate our kids and do everything else."

Viren Shah, president, Federation of Retailer Traders Welfare Association, threatened a strike. "We have told the government to withdraw the draft housing policy within 15 days (of whenever it is launched), or face mass action and protest."

Another tenant said, "By hiking the rent abnormally, the government wants to oust the tenants, and give the property in the hands of the landlords and a few builders, so that they can financially exploit the land mostly available in
south Mumbai."

Maharashtra Housing Minister, Prakash Mehta, was unavailable for comment