The slum areas (improvement and clearance) ACT1956+Rent control

THE SLUM AREAS (IMPROVEMENT
AND CLEARANCE) ACT, 1956
JOSEPH JOSEPH CHALISSERY M2 UD

ACT:
An Act to provide for the improvement and
clearance of slum areas in certain Union Territories
and for the protection of tenants in such areas from
eviction.

1. To facilitate inclusive growth and slum-free cities.
2. To provide assured security of tenure, basic amenities and
affordable housing for slum dwellers.
3. To assign a “legal document of entitlement” to every
landless person in a slum area entitled to a dwelling space.
4. To give mortgageable rights to allottees of dwelling space.
however, tradability of dwelling space limited to the
Government or the slum collectives.
5. To provide compensation for acquisition of land,
wherever necessary, in the form of concessional
building.
5 major ingredients of the slum areas (improvement and
clearance) act, 1956

Guiding Policy
Slum improvement and upgrading is a necessary condition
for slum-free cities; however, it is not a sufficient condition;
Several complementary steps to accompany this policy.
Complements to Slum Improvement and Upgrading
• Bring in additional lands for urban usage on a continual basis
• Revise upwards the floor space index (FSI)
• Provide tenurial society
• Extend basic services to slum areas
• Involve the community in the process of upgradation
• Integrate slum improvement strategies (RAY) with the
JNNURM

Legislative Imperatives
• Simplify the process of converting rural land for urban usage
• Change cumbersome land acquisition procedures
• Modify building bye-laws and zoning laws
• Put in a transparent land record system
The proposed legislative framework constitutes a major step towards a
formal recognition of slums and implicitly their contribution to the national
socioeconomic system. It signals a formal shift in India’s policy towards slums.
Basic assumption is that property rights in the form of a legal
document of entitlement and mortgageability will enable slum dwellers
access “credit”, a key factor in urban poverty alleviation strategy.

There are several important disconnects:
i. The proposed Act is, a best, a partial response to the problem of
slums. It misses out on slum prevention strategy as a complement to slum
upgradation strategy which could prove “counter-productive”.
ii. The properties rights of “slum dwellers”under the proposed Act are inferior.
Global experience suggests that formalization of property rights does not
necessarily lead to access to credit;
iii. Upgraded settlements will have an incomplete formal status; and
iv. Creating a separate Act to grant property rights to slum dwellers rather
than to amend the existing Acts (which do not recognize informality and
which are adverse to the interests of the poor) would make it difficult
to integrate slum dwellers and settlements into the local fiscal system.
A long term sustainable approach lies in a legislative framework that
aims at integration of slums with the city economy rather than to formalize
the existing division between slum and non-slums. Legislative reforms lag
behind the policy initiatives for slum upgradation and urban poverty
alleviation.

Rent Control Act was an attempt by the Government of India to eliminate
the exploitation of tenants by landlords. Rent legislation tends to providing
payment of fair rent to landlords and protection of tenants against
eviction
The practice of imposing a legal maximum upon the rent in a particular
housing market, below the equilibrium rent is called rent control.
If this maximum is above that market’s equilibrium rent (different rental
housing markets may have different equilibrium rents), then the control is
null and void. But if the rent is set at a level below the equilibrium rent, it
will necessarily lead to a situation of excess demand or shortage. In a free
market, prices (here, rents) would rise automatically filling the gap
between the demand and the supply. But rent controls prevent prices
from rising up to the equilibrium level and thus, alternative rationing
mechanisms such as black and uncontrolled markets evolve.
What is Rent Control Act

The Delhi Rent Control Act: Historical Background
•The first rent control measure in Delhi came after the outbreak of the
Second World War in 1939, under the Defense of India Rules.
•This was restricted to New Delhi. In 1942, the provisions of the Punjab
Urban Rent Restriction Act, 1941 were made applicable to the remaining
areas of Delhi.
•After the war, another comprehensive legislation was passed for all parts
of Delhi by the name of The Delhi and Ajmer Marwara Rent Control Act,
1947. In 1952, it was repealed by The Delhi and Ajmer Rent Control Act,
which substituted it and ceased the application of rent Acts of other
states to certain parts of Delhi.
•Another attempt was made in 1958 to plug certain loopholes of the 1952
act. In the same year, the Slum Areas (Improvement and Clearance) Act
was passed which sought to protect the interest of the slum dwellers. The
next comprehensive enactment on rent control in Delhi was passed in
1958 and came into force on February 9, 1959. This is the current legislation
of rent control in Delhi and it extends to the areas included within the New
Delhi Municipal Committee and the Delhi Cantonment Board, together
with the urban areas of the Municipal Corporation of the Urban Areas in
Delhi.

The Legal Aspects of Rent Control
Under the Indian Constitution, housing is a state subject. Thus, the
enactment and enforcement of rent control laws is the responsibility of the
individual states. While this is in accordance with the federal nature of the
Indian Republic, it makes a comparative analysis of the rent control laws
that much more difficult. The common thread running through almost all
rent control Acts and legislations is that they are intended to serve two
purposes:
1. To protect the tenant from eviction from the house where he is living
except for defined reasons and on defined conditions; and
2. To protect him from having to pay more than a fair/standard rent.
The landlord is required to specify the exact provision of the relevant act
under which he is seeking the eviction of the tenant, to enable the tenant
to take any remedial action provided in the act. The whole idea of a rent
control act is to control and regulate eviction of tenants and not to stop it
altogether.

Arguments against Rent Control
The arguments for rent deregulation and the reasons for its repeal or non-
existence are divided into three parts – economic, social and legal.
1. Fixation of standard/ fair rent (Worked out on the basis of the value of
land and cost of construction when built, as per the provisions of the Rent
Control Act) as a percentage of the cost of construction is a major
disincentive for those wanting to invest in rental housing as it gives a very
low rate of return as compared to other assets.
2. The low rate of return also leads to rapid deterioration of existing
housing stock,as landlords have no incentive to invest any funds in the
upkeep of their apartments.
3. It’s difficult to evict a tenant once the house has been rented, thanks
to the provisions of the RCA. Thus, the fear of losing perpetual control of
their houses might lead them to withdraw their vacant premises from the
rental market, leading to reduced supply
4. It’s difficult to resell a tenanted house from which it’s difficult to evict
tenants. This reduces liquidity in the market for ownership housing.
5. As any other price control, rent controls also distort incentives and price
signals, leading to inefficient allocation of resources (here, land and
building). This is because in presence of rent controls, houses don’t always
get allocated to those who are willing to pay the highest rent.

The slum areas (improvement and clearance) ACT1956+Rent control

The slum areas (improvement and clearance) ACT1956+Rent control

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