Data show that nearly half of Delhi’s population lives in slums or unauthorised colonies. Among various other reasons, the Delhi Rent Control Act, which has been challenged in the Delhi High Court recently, is responsible for the present state of affairs. The Act, its critics claim, hurts the interests of landlords and tenants in equal measures. Landlords in the national capital’s central locations such as the City Zone, the Sadar, Paharganj Zone, Karol Bagh Zone and Civil Lines do not pay house tax because their earnings from these rent-controlled properties are meagre. Tenants of such properties also refrain from paying taxes because they fear that the property will fall out of the rent control regime if they pay the tax. Apart from making housing expensive, rent control laws are also the reason why many buildings in Delhi are poorly maintained.
However, Delhi’s experience is not unique. Throughout the world, rent control laws make housing expensive and hurt the interests of landlords and tenants, especially the low-income households. Unlike other Asian countries such as Singapore, Hong Kong and Japan which became prosperous as they made housing affordable by repealing rent control laws. In fact, rent control laws were imposed in most countries during the World War-II but were either repealed or mellowed over the next few decades. In Delhi, where the Rent Control Act was imposed in 1939, the law went through an evolution till 1959, but did not undergo major changes.
Read more: https://www.proptiger.com/how-rent-control
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