GVA of owner occupied dwellings – user cost approach

The CSO estimates output of ownership of dwellings equivalent to the value of gross rentals of residential houses and the gross value added is estimated as output less expenditures on repairs and maintenance. In this method, the information available on rent per dwelling from the NSS Consumer expenditure surveys is applied on all residential houses irrespective of whether they are actually rented or owner occupied. This implies that for owner occupied dwellings, the rent is imputed on the basis of rented dwellings. From the surveys of NSSO, it is revealed that about 92 per cent of households in the rural areas and around 60 per cent of the households in urban areas, live in their own dwellings. Thus, imputation of rent is done for a large part of residential dwellings in rural areas. According to the international recommendations, when few dwellings are rented, the output of dwelling services should be estimated by the user cost approach. This approach consists of estimating each of the expenditure that owners of dwellings would need to take into account in fixing a market rent if they decided to rent their dwellings. This paper makes an attempt to estimate value added of ownership of dwellings using the user cost approach.