Affordable Rental Housing under PMAY-U 2.0: ARHC Scheme, Eligibility & Benefits

What is Affordable Rental Housing under PMAY-U 2.0?

PMAY-U 2.0 is the current urban housing mission of the Ministry of Housing and Urban Affairs. It provides Central assistance for eligible urban households and implementing agencies to construct, purchase or rent housing at affordable cost.

The mission has four verticals:

• Beneficiary Led Construction (BLC);
• Affordable Housing in Partnership (AHP);
• Affordable Rental Housing (ARH); and
• Interest Subsidy Scheme (ISS).

The ARH vertical is intended to address the need for affordable rental accommodation among urban residents who may not be in a position to purchase a house or who require housing close to employment and economic activity.

Earlier Affordable Rental Housing Complexes (ARHC) Framework

Affordable Rental Housing Complexes were introduced under the earlier PMAY-U framework following the large-scale movement of migrant workers during the COVID-19 pandemic. The objective was to provide affordable, dignified rental accommodation near workplaces for urban migrants and the urban poor.

An ARHC project was conceived as a listed rental-housing project comprising dwelling units and/or dormitory accommodation together with basic civic infrastructure such as water supply, sanitation, sewerage or septage arrangements, roads and electricity, along with necessary social and commercial infrastructure.

The earlier framework particularly targeted persons belonging to Economically Weaker Sections (EWS) and Low Income Groups (LIG) who required affordable accommodation in urban areas.

Who Can Benefit from Affordable Rental Housing?

The earlier ARHC framework identified a broad class of urban migrants and poor persons from EWS/LIG categories. Depending on the project and applicable rules, potential beneficiaries could include:

• industrial workers;
• construction workers;
• street vendors and other urban service providers;
• migrant workers associated with markets and trade associations;
• employees of educational and health institutions;
• workers in the hospitality sector;
• students;
• persons staying in a city temporarily for employment, education or health-related reasons; and
• other eligible urban residents covered by the applicable rental-housing framework.

ARHC Implementation Models

Model 1: Conversion of Existing Government-Funded Vacant Houses

Existing vacant houses built with government funding could be converted into ARHCs through Public Private Partnership arrangements or by public agencies.

Model 2: New ARHCs on Vacant Land

Public or private entities could construct, operate and maintain ARHCs on their own available vacant land.

These two models were designed to make productive use of existing vacant housing stock while also encouraging fresh investment in the rental-housing sector.

Housing Standards under the Earlier ARHC Framework

The earlier scheme permitted a mix of single-bedroom units, double-bedroom units and dormitory accommodation, together with common facilities. A maximum of about one-third of the dwelling units in a project could be double-bedroom units.

ARHC projects were intended to be used exclusively as rental housing for a minimum period of 25 years.

Expected Benefits of Affordable Rental Housing

• Provide decent rental accommodation close to workplaces at affordable rates.
• Reduce dependence on slums, informal settlements and unauthorised colonies.
• Improve workforce stability and productivity for industries and service-sector establishments.
• Put vacant government-funded housing stock to productive use.
• Encourage public and private entities to utilise vacant land for rental housing.
• Create investment and entrepreneurship opportunities in the rental-housing sector.
• Support municipal finances and planned urban development.

Incentives under the Earlier ARHC Framework

Central Government Support

The earlier ARHC framework contemplated a range of financial and policy incentives, subject to the conditions applicable to the relevant project and period. These included concessional project finance, priority-sector lending treatment and Technology Innovation Grants for specified projects using innovative construction technologies.

Tax treatment and fiscal incentives must be checked under the law and notifications applicable to the relevant period. They should not be assumed to continue solely because they appeared in the original ARHC announcement.

State, UT and ULB Facilitation

State Governments, Union Territories, Urban Local Bodies and parastatal agencies could facilitate ARHC development through measures such as:

• land-use permission changes where required;
• additional FAR/FSI where permitted;
• single-window statutory approvals;
• trunk infrastructure up to the project site; and
• municipal charges aligned with residential use, subject to local rules.

Current Status: PMAY-U 2.0 and Affordable Rental Housing

PMAY-U 2.0 became effective from 1 September 2024 and is to be implemented for five years. Unlike the earlier framework where ARHCs were a sub-scheme of PMAY-U, the new mission specifically identifies Affordable Rental Housing (ARH) as one of its four principal verticals.

The Ministry of Housing and Urban Affairs continues to identify affordable rental housing as an important part of urban housing policy, particularly for migrant workers, working women, industrial and construction workers, the urban poor and other vulnerable groups.

Applicants, project entities and implementing agencies should rely on the latest PMAY-U 2.0 operational guidelines, State/UT implementation rules and project-specific notifications for current eligibility, financing, rent-setting, tenancy, approvals and incentives.

Important Points Before Applying or Participating

• Check whether the housing project is officially recognised under the applicable PMAY-U / PMAY-U 2.0 framework.
• Verify beneficiary eligibility under the current State/UT or implementing-agency rules.
• Do not rely on historical 2020-22 financial incentives without checking current notifications.
• Review the latest rent, tenancy, allotment and occupancy terms of the specific project.
• Use official Ministry of Housing and Urban Affairs and PMAY-U resources for current project and policy information.