Maharashtra Expands Incentives to Drive Rental Housing Growth Across Mumbai Metropolitan Region

Real Estate Today - India
Nov 21
2 min read

The Maharashtra Housing and Area Development Authority (MHADA) has unveiled an ambitious set of incentives designed to accelerate the development of rental housing across the Mumbai Metropolitan Region (MMR), offering tax exemptions, reduced levies and extra floor space for qualifying developers.

The initiative provides a complete waiver of income tax on rental income for 10 years, a five-year property tax exemption, and reduced Goods and Services Tax (GST).

Developers in Mumbai will also receive an additional 0.5 floor space index (FSI) and 0.3 FSI in other MMR areas, free of cost.

Sanjeev Jaiswal, Vice President of MHADA, presented the draft rental housing policy this week, inviting feedback from builders and industry bodies.

MHADA, now appointed as the nodal agency for rental housing, is also proposing a 50% reduction in development charges, with those funds redirected back to housing societies for maintenance purposes.

To further support long-term operations, MHADA has urged full property tax exemption for the first five years and a 50% concession for the following five. The proposal also includes waivers on stamp duty and GST, and a cap of 6% on lending rates for projects financed by banks or housing finance institutions.

The policy will enable public-private partnerships and hybrid models, allowing long-term leasing of government land for rental housing projects.

Developers may also exit after completion by selling tenements to tenants or the open market, subject to approval.

Jaiswal confirmed MHADA has drafted both the Rental Act and its operational framework, which will be presented to the Chief Minister and Housing Minister before being introduced to the legislature.

He noted that Maharashtra currently has 2.1 million unoccupied homes, nearly 44% of which are within the MMR, representing a vast pool of underutilised housing stock.

The proposed rental model targets migrants, students, working women, labourers, tourists, disaster-affected families, and lower-income households, with a long-term aim of providing viable rental alternatives to informal or substandard accommodation.

Addressing long-standing concerns about legal disputes, Jaiswal highlighted that rental disagreements in India often drag on for years, paralysing the market.

A dedicated rental housing portal will be established to improve transparency and streamline information access for tenants and landlords.

The state government has also outlined a broader plan to build 3 million homes across Mumbai and the MMR by 2030, of which MHADA will deliver 800,000 rental units.

A new cluster redevelopment policy has been approved for MHADA layouts exceeding 20 acres, removing the need for individual resident consent, provided society-level approval is obtained.

The initiative reflects Maharashtra’s push to reframe rental housing as a key pillar of urban growth — shifting focus from ownership to mobility, affordability and inclusivity across one of India’s most expensive real estate markets.

This article was independently written and edited by Real Estate Today India. All information was drawn from verified public records, government proceedings and industry commentary. © Real Estate Today India