Western countries and India both face a rise in vacant properties, but for separate reasons, which call for different solutions
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Cities in the developed world, as well as Indian cities, have been facing a rise in unoccupied properties. In Western cities, this is primarily on account of de-industrialisation, economic downturn, and demographic decline. However, In India, unlike the West, urban populations are growing, the economy is doing well and industrial activities are on the rise. The reasons for vacant homes in Indian cities lie elsewhere—in archaic rent control laws that remain un-reformed for decades, sub-optimal land use plans, and speculation by city developers and homeowners. Some of these are beyond the control of cities and fall in the domain of the states. However, the adverse consequences are far-reaching. Unutilised housing stock hurts the national, state, and city economies and cannot be allowed to fester. Just as the West is experimenting with a fresh set of solutions, states and cities in India need to reform their laws, repair their local plans and bring in fresh legislation to prevent the growing phenomenon of vacant homes.
Just as the West is experimenting with a fresh set of solutions, states and cities in India need to reform their laws, repair their local plans and bring in fresh legislation to prevent the growing phenomenon of vacant homes.
‘Vacant homes’ refer to properties that have been freshly constructed but not found occupants, or older properties that were previously occupied but have now fallen into disuse. Cities in the developed world face this issue due to two major factors. One of them is de-industrialisation. Since de-industrialisation leads to the closure or relocation of industrial activity lands that were once occupied are no longer productively utilised. Part of the workforce that worked in these industries moved elsewhere because of their inability to afford their homes. These cities have also been experiencing a population loss, giving rise to ‘shrinking cities.’ The loss of population could happen due to outmigration, a fall in birth rate below replacement levels, preference-based residential shifts, suburban expansion negatively impacting city growth, economic downturn forcing people to seek employment elsewhere, environmental changes that have made parts of a city inhospitable, or war and strife that make the place too dangerous.
According to the United States (US) Census Bureau, as of 2022, there were approximately 15.1 million vacant homes nationwide. These vacant homes, which include rental housing, comprise 10.5 percent of the total US housing inventory. While vacant lands represent all types of land, including vacant homes, they help us understand the vacancy trend for homes in the county. In cities of more than 100,000 people in the US, vacant lands range from 19 to 25 percent of the total land area. In other cities with populations above 250,000, the vacant land percentage is between 12.5 and 15 percent. This means that smaller cities are experiencing a greater economic and demographic decline. Europe, too, has been facing a similar problem; in 2016, one in six properties or around 38 million homes were estimated to be vacant. The Organisation for Economic Co-operation and Development (OECD) estimated that one in every four properties in Greece, Portugal, and Bulgaria were empty in 2016. Hungary and Cyprus had a 12-percent vacancy, Slovenia and Finland 11 percent, Ireland 9 percent, and France 8 percent.
The Organisation for Economic Co-operation and Development (OECD) estimated that one in every four properties in Greece, Portugal, and Bulgaria were empty in 2016. Hungary and Cyprus had a 12-percent vacancy, Slovenia and Finland 11 percent, Ireland 9 percent, and France 8 percent.
In such a situation, cities struggle to maintain “quality of life and enhanced aggregate social value,” making them adopt a pro-growth strategy to shore up the economy. However, they must replace the earlier traditional emphasis on residential and commercial growth since the factors of deindustrialisation and population loss provide no succour to those strategies. It could be possible to put these vacant properties to another use, such as providing a social amenity that was either missing or insufficient. Regarding some properties, citizens themselves could take the initiative to re-engineer them into community spaces. This would require more flexible local regulations, allowing a larger variety of uses.
Such initiatives are plentiful in Europe. In Budapest, the Hungarian Contemporary Architecture Centre has teamed up with non-governmental organisations, social enterprises, professional organisations and municipal decision-makers to rework the statutory frameworks, so that they allow different uses of vacant properties for a defined period. This approach identifies local organisations in need of space and matches them to empty properties that meet their requirements. This could include shops, school buildings and more. Space, a United Kingdom-based organisation, works with local communities to tweak regulations so that they allow the temporary use of vacant homes for community benefit and social enterprise. Several cities have adopted such measures to reanimate vacant spaces and put them to profitable use. However, in other cases, where cities are struggling with non-cooperation in the maintenance of properties by their owners, countries are considering more regulatory measures to bring back empty homes to use. One of these is the imposition of a tax on such houses. Ireland has called this the Vacant Homes Tax (VHT). Owners of properties that get marked out as ‘deliberately kept vacant,’ have to pay the VHT as long as their property is vacant.
It is significant to compare the situation in the Western world with India. Commercial buildings in Western cities are falling vacant due to an economic downturn, and residential units are turning into ‘ghost homes’ because there are no people to occupy them, or because landlords are not spending on their maintenance. For example, a recent University of Illinois study has concluded that 30,000 cities in the US will become ghost towns by 2100, primarily because of declining population. Indian cities, on the other hand, generally do not face problems of economic downturn or the loss of population. The urban population in the country has been increasing every decade, and large cities are adding huge populations that are difficult to handle. The economies of Indian cities have also been generally thriving.
Shockingly, although a large population in Indian cities cannot find housing, huge numbers of residential properties are lying vacant in the mega and metropolitan cities of India. In 2011, urban India had 11.1 million units of vacant houses, which is 12.4 percent of its urban housing stock. This was up from 1.83 million in 1971. Whereas the increase in vacant units was a mere 0.46 million between 1971 and 1981, in subsequent decades, the numbers have sharply risen: 2.15 million from 1981-1991, 2.01 million from 1991-2001 and 4.64 million from 2001-2011. This trend indicates the rising proclivity of ‘premiumisation’ in the real estate sector (an increased focus on producing high-end residential units), leading to a situation where the high-demand affordable housing segment remains in perennial short supply.
The vacancy phenomenon in India can be attributed to archaic rent control laws. However, it is also a result of faulty and insufficiently customised land use plans and the almost complete abandonment of the housing sector to private enterprise which seeks only to maximise profitability by constructing high-end residences. In any event, these residential units cannot be allowed to remain unoccupied indefinitely. That adversely impacts the city economy and smacks of the pernicious practice of speculation.
State governments and cities must bring in laws and regulations to force their occupation. The Vacant Homes Tax, like Ireland, is a good idea. The tax base must be escalated based on the vacancy period, with the forfeiture of properties being kept vacant beyond a specific period. Besides, there is a clear and present need for housing policy reform to enable a greater production of affordable housing in our cities. Housing is a key social good that mandates a sharper regulatory presence of the government, mainly because its withdrawal hits the urban poor the hardest.
Ramanath Jha is a Distinguished Fellow at the Observer Research Foundation
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Dr. Ramanath Jha is Distinguished Fellow at Observer Research Foundation, Mumbai. He works on urbanisation — urban sustainability, urban governance and urban planning. Dr. Jha belongs ...
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