Rent Control in Mumbai

To renters, rent control is often seen as a very good thing. But cheap rents can actually cost a lot.

Let’s take a look at the consequences of rent control in Mumbai, where many tenants are paying for their flats at 1940s rates. If a landlord receives a few hundred rupees per month for large flats that, on the market, should be renting at 100,000 rupees, this greatly disincentives making necessary building repairs. The landlord may not even be able to afford the taxes on the building, not to mention the upkeep.

When you have enough rental situations like this, it can lead to a crumbling city – quite literally. Occupied rent-controlled buildings have been known to suddenly collapse.

Additionally, Indian tenant rights are strong, and the courts are very slow, so it’s difficult to evict anyone. Many landlords simply prefer to leave their rent-controlled flats unoccupied rather than risk getting stuck with the same tenant, at the same price, for the next fifty or so years. And yet there’s a massive housing shortage in Mumbai. Thanks to the costs of rent control, it’s estimated that about 15% of the Mumbai housing stock is vacant.

In the video, Alex Tabarrok talks with Vaidehi Tandel, Reuben Abraham, and Kshitij Batra at the IDFC Institute, a think tank in Mumbai that focuses on the issues surrounding urban infrastructure. Their conversations offer insight into the housing crisis plaguing Mumbai.