MHADA Drafts New Rental Housing Model Allowing Tenants to Buy Units After Five Years
Mumbai, 21st November 2025: In a move aimed at easing Mumbai’s housing pressures, the Maharashtra Housing and Area Development Authority (MHADA) has prepared a standalone rental housing policy that will earmark a portion of units in current, upcoming and redevelopment projects exclusively for rentals. The proposal, shared with state officials this week, introduces a significant shift: applicants who are unsuccessful in MHADA’s housing lotteries may soon be able to rent an eligible home, and later purchase it after five years of occupancy.
Although the policy draft does not specify the percentage of units to be diverted to the rental pool, MHADA will decide on the final quota after assessing supply across various boards. The scheme is set to be implemented statewide, including within the Mumbai board’s large redevelopment footprint.
The Maharashtra government has underscored rental housing as a core pillar of its broader housing agenda and has appointed MHADA as the lead agency for its rollout. With the Mumbai Metropolitan Region (MMR) projected to experience rapid growth, policymakers expect demand for both rented and owned homes to escalate.
To prepare for this shift, MHADA has formulated a detailed rental housing framework and submitted it to the state for approval. Senior officials, during a review meeting on Wednesday, highlighted the major components of the proposal.
Incentives Planned for Developers
The draft provides numerous incentives to encourage developers to participate in rental housing. Not only will new developments be eligible, but redevelopment schemes in Mumbai and the MMR will also need to set aside a fixed proportion of their inventory for rental use. The share—likely to be 5%, 10%, 15% or more—will be finalized at a later stage.
For regions outside the MMR, officials said that quotas will be calibrated based on local demand and demographic requirements.
Affordable Rentals With a Pathway to Ownership
One of the most notable features of the proposal is the mechanism that will allow tenants to become owners. Under the draft policy, MHADA’s rental units will be offered at modest, regulated rents. After five years of tenancy, occupants will have the option to purchase their unit.
The sale price will be calculated according to the prevailing ready reckoner rate, and MHADA will deduct the rent already paid during the five years from the final payable amount—effectively reducing the purchase cost for long-term tenants.
A Boost for Home Seekers Across Mumbai and MMR
Housing experts say the new rental framework could help bridge the gap for thousands of applicants who repeatedly miss out on MHADA’s competitive lotteries. With a structured rental option that transitions into ownership, the policy is expected to widen access to affordable housing in one of India’s most expensive real estate markets.
MHADA officials have described the draft policy as a “major step toward improving affordability and expanding housing access” for urban residents, particularly within the Mumbai and MMR regions.
