In the National Housing Policy, the Government of India has recognized the contribution of the private sector to the overall housing developments in the country. Consequently, the government has come up with certain policies to encourage large-scale private investments in housing development by the private sector.

In this direction, the Government of India has taken a major step in augmenting the operation of the housing finance institutions (HFI) under the umbrella of the National Housing Bank. However, it is to be recorded here that the finance available from the HFIs is yet to reach the lower income groups and the economically weaker sections of the population since the leading terms of the HFIs cannot comply with the above two groups who constitute the major section of the urban population.

Another major constraint to large-scale housing construction is the Urban Land (Ceiling and Regulations) Act; this Act has failed to release large parcels of land for social housing. For example, Properties in Kerala shrunk beyond its economically viable value due to this one Act. In spite of the repeated pronouncements made by the Minister of Urban Development, no amendment has yet taken place.

The National Commission on Urbanization has been very critical about the performance of the Urban Land (Ceiling and Regulation) Act; it has been proposed in the report that the Act should be amended at the earliest. Even then, no initiative has been taken to amend the Rent Control Act/Premises Tenancy Act in Kerala and also in the different states of the country to boost rental housing. Under the prevailing rental acts/laws, the owners are reluctant to invest in housing for rental purposes and to make significant improvements in the rented houses. Due to such developments, the condition of the rented houses is deteriorating day by day.