Rental Housing in Informal Settlements – A Case-Study of Rajkot

Studies across the world have shown the presence of rental housing in almost all informal and slum settlements. This research is an attempt to understand rental housing within the informal housing and discerning its characteristics in comparison to the informal sector owner-occupied housing in the city of Rajkot in Gujarat.
By and  |  September 28, 2011


The current government paradigm towards urban poor housing is to provide land titles to the poor and promote ownership housing. However looking at the current housing market, especially in large industrial and commercial cities, rental housing as an accessible housing option for the poor cannot be over-looked. Literature review has shown rental housing to be an integral part of the housing tenure systems in the city, as well as in the stages of a migrant’s upward mobility from a squatter to ownership housing. Studies across the world have shown the presence of rental housing in almost all informal and slum settlements. This research is an attempt to understand rental housing within the informal housing and discerning its characteristics in comparison to the informal sector owner-occupied housing in the city of Rajkot in Gujarat.


Rental housing provides the much needed ‘room for manoeuvre’ (Oakpala, 1981 in (Kumar, 2001) or flexibility of tenure arrangements during the lifetime of an urban poor household. Rental housing lessens the burden on a migrant to invest on shelter till one can manage to have disposal income for ownership housing. It is responsive to in an individual’s and a household’s life-cycle changes and is an asset for tenants as well as landlords. Rental housing is influenced by the local economic conditions and employment.

There is a long-drawn debate on the significance of ownership versus renting in housing. It is a popular belief that all households aspire to own housing. Many studies have proved this assumption to be true. However, the crucial question is not if ownership is desired by poor households, but if ownership housing is accessible to them (Kumar, 1996). Issues of accessibility have come up in housing policy discussions because the governments across the developing countries have tended to design their public housing programmes to cater to the demand for ownership housing. On the contrary, studies across the world have shown that rental housing is of particular importance to the migrants. It has been theorized as the first entry point for a migrant in a city. Until a migrant can manage to find a stable job and save to invest in ownership housing, rental housing provides him/ her with numerous options shelter. Yet, the housing policies do not pay attention to the rental housing needs.

In the quest to be ‘World Class City’, whatever that means in the cities of the developing countries, many city have launched demolition drives, with the backing of planning legislation, which consider slums and squatter settlements as encroachments. Infrastructure project implementation has also led to displacement of slums and squatters and in some instances they have been entitled to rehabilitation. Most of the rehabilitation projects are designed based on an understanding that the dwellers would desire ownership housing and hence invariably, the rehabilitation package is a dwelling unit given on ownership basis. At the same time, in the rehabilitation process, house owners are viewed as legitimate beneficiaries while missing out the tenants of the demolished slums and squatter settlement.

‘The struggle for housing is most often a struggle for land’ (Satterthwaite, 2009). Land ownership is a state-subject and in most cities government is the largest landowner. In the Indian context, land is under the eminent domain of the state and by this fact the state has the right to regulate the use and transfer of land. The state therefore defines the land use and transfer policies and regulations. In some instances, the state is actively engaged with deciding the prices of land but in general, its policies determine the land prices. In situations of high economic growth rates and increasing inequality as a consequence of growth, which has been observed in India since economic reforms, the urban land in particular becomes a parking place for speculative investments resulting in rapid rise in land prices. Land becomes a commodity and of speculative kind. Housing struggles have therefore focussed on either non-availability of lands for low income housing or for evictions from lands for high value activities.

Marxism defines ‘commodification’ as the assigning of economic value to something, thereby making it part of the market. Due to the liberalisation of the market in the 1990s, the economy opened up to Foreign Direct Investments (FDI) and under-developed capital markets could not offer avenues for investments, other than land (Payne, 1989; Angel and others, 1983 in Kumar, 1994). Under the structural adjustments suggested by the World Bank and IMF, liberalized economies became eligible to receive investments, grants, loans, etc. from them as well as other large trans-national and multinational organizations. All these changes made investments into cities and urban lands of the developing countries very promising. Thus land has transformed into a tradable commodity in the market, and the land allocation process has become very competitive. Governments in developing countries are encouraged to make profits from available lands, rather than ensuring equitable distribution based on requirement. As part of the real estate market even informal lands are an expensive commodity and thus land grabbing, sub-divisions, informal sales, etc., have made squatting more and more difficult for the poor. The tendency of commercial penetration into informal sub-markets has resulted in the profusion of the rental housing. Thus the poor have to consider the option of renting and share holding as affordable form of housing in the cities (Amis, 1984 in Kumar, 1994).

Gilbert and Ward (in Kumar, 1994) have argued that, in terms of accessibility to land, ‘an increase in the cost of land would eventually result in an increase in the proportion of tenants and sharers.’ Informal settlers and urban poor households who originally acquired plots are motivated to develop rental housing, leading to the emergence of new sub-market of squatter tenants and multi-occupancy (Kumar, 1994). In such a situation, even households which would have expected to be able to acquire small plots, are unable to do so and have to continue living in rental accommodation.

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