Maharashtra Rolls Out Big Incentives to Push Rental Housing in Mumbai Metropolitan Region

Mumbai, Maharashtra:
In a significant effort to expand rental housing across Mumbai and the Mumbai Metropolitan Region (MMR), the Maharashtra government has introduced a wide-ranging package of incentives aimed at encouraging developers to take up rental housing projects. The Maharashtra Housing Area Development Authority (Mhada) has been named the nodal agency to drive this initiative forward.

Under the new policy, developers will receive a complete waiver of income tax on rental income for 10 years, along with a five-year exemption from property tax, followed by 50% property tax for the next five years. The government has also offered GST concessions and additional free FSI of 0.5 in Mumbai and 0.3 across the MMR for eligible rental housing developments.

Mhada vice-president Sanjeev Jaiswal presented the draft policy to developers and said the government is seeking industry feedback before placing the final version before the housing minister, the chief minister and the state legislature. He added that Mhada has proposed reducing development charges by 50%, with the expectation that the amount collected by civic bodies should be returned to societies as a maintenance corpus.

Jaiswal pointed out that Maharashtra currently has 21 lakh unoccupied homes, with 44% of them located in the MMR. He noted that both Mhada and CIDCO hold a “Huge unsold Inventory,” and that a robust rental housing framework could help address the needs of migrants, students, labourers, working women, tourists, project-affected families, disaster-affected individuals, the homeless, and those from economically weaker sections. The long-term aim is to offer rental homes that can eventually transition into ownership.

The new policy allows for public-private partnerships, hybrid models, and long-term land leases, making rental housing more financially feasible. Developers will also have the option to exit rental projects later by selling units either to tenants or on the open market.

Jaiswal highlighted that one of the biggest challenges for rental housing is the lengthy dispute resolution process. Rental-related conflicts often take between 5 and 15 years to settle, with 67% of cases extending beyond five years and only 10% being resolved within two years. To address this, the state plans to introduce a dedicated rental housing portal to provide comprehensive information on available rental units and streamline processes.

The initiative ties into the state government’s broader housing goals. Maharashtra aims to construct 30 lakh homes by 2030 across Mumbai and the MMR, with Mhada tasked with delivering 8 lakh homes, including rental units, as part of this target. The state hopes that boosting rental supply will support economic growth across the region.

In addition, the cabinet has approved a cluster redevelopment policy for all Mhada layouts in Mumbai spanning over 20 acres. Under this new system, the consent of individual residents will no longer be required; instead, the approval of the housing society alone will be sufficient to proceed with redevelopment.

To support developers financially, the policy includes zero property tax for the first five years, 50% property tax for the following five, waiver of stamp duty and GST, and an interest rate cap of 6% on loans from financial institutions for rental housing projects.

With a combination of tax incentives, regulatory reforms and additional FSI, the state hopes to unlock its large stock of vacant homes and bring renewed strength and scale to the rental housing market in the MMR.

By Sana khan
Content Writer, Realty Quarter