Homestay in Telangana:

When a Residential House Can Become Tourist Accommodation

 

Advocate Y Babji,

The concept of a homestay has gained considerable popularity in Telangana with the growth of domestic tourism, weekend travel and demand for accommodation that is more personal and home-like than a conventional hotel. However, a significant legal question arises when a residential house is used to accommodate paying guests: Does letting out rooms in a house automatically convert the premises into a commercial establishment? The answer is no. But equally, every paying-guest arrangement cannot be called a homestay.

The distinction is important because a homestay, a paying guest accommodation, a serviced apartment, a hostel and a hotel are not necessarily treated alike under building, planning, tourism and fire-safety regulations.

Under the Telangana Tourism Homestay Guidelines, a homestay is essentially a form of tourist accommodation in a residential premise where the owner and family continue to physically reside. The underlying idea is that the visitor is staying in a genuine home rather than in a building established exclusively for commercial lodging. The concept therefore combines residential occupation by the owner with limited accommodation for tourists.

This is the first and most important distinction between a genuine homestay and a commercial lodging establishment. A person cannot simply take an independent residential building, vacate it and rent all its rooms to tourists and then describe the property as a "homestay". If the owner or promoter does not reside in the premises, the arrangement falls outside the basic concept of the Telangana Tourism Homestay scheme.

The Telangana Tourism Guidelines also place limits on the scale of a homestay. The scheme contemplates a limited number of lettable rooms and provides for a maximum of five lettable rooms and ten beds. These limitations are significant because they demonstrate that the Government does not intend a large hotel or boarding establishment to operate under the relatively lighter framework applicable to a family home receiving a limited number of tourists.

Thus, the character of the activity depends not merely on what the owner calls it but on what actually happens in the premises.

A second important point is that homestay registration under the Tourism Department is not a substitute for building permission from the local authority. The owner must still comply with the applicable municipal and building regulations. The Tourism Guidelines themselves require documents relating to the building and its approval by the competent local authority. Consequently, registration as a homestay cannot be used to regularise an unauthorised building or an unauthorised change of use.

This distinction is particularly relevant in Hyderabad and other urban areas governed by the Telangana building regulations. A residential building is sanctioned for a particular use. If the building is subsequently converted into a hotel, lodge, large paying guest establishment or commercial serviced apartment facility, the question of change of use and compliance with planning regulations arises independently of any tourism registration.

For example, suppose a house is sanctioned as an ordinary residential building. The owner lives there with the family and lets out two or three rooms to tourists while continuing to occupy the premises. Subject to compliance with the Telangana Tourism Homestay Guidelines and local building requirements, this may qualify as a genuine homestay.

The situation would be quite different if the owner vacates the house, divides it into numerous rooms, installs common facilities, advertises it as accommodation and rents the rooms to unrelated persons on a continuous commercial basis. Calling such an establishment a "homestay" does not automatically make it one. Depending upon the actual circumstances, it may be treated as a paying guest establishment, hostel, lodging establishment or another form of commercial accommodation.

This brings us to another important distinction: a homestay is not the same thing as a paying guest accommodation. In a traditional paying guest arrangement, the property may be occupied by students, employees or other persons who pay for accommodation, often for longer periods. The owner may or may not reside in the premises. The Telangana Tourism Homestay Guidelines specifically distinguish their homestay scheme from such arrangements.

Similarly, a serviced apartment cannot automatically be classified as a homestay merely because each unit contains a kitchen, bedroom and living area resembling a residential apartment. When apartments are operated systematically as short-term accommodation for paying customers as a business, the nature of the use may be commercial or lodging-related even though the physical design resembles a residence.

The distinction has practical consequences for parking. A genuine residential house is subject to residential parking requirements applicable to its sanctioned use. A hotel or other non-residential commercial establishment can attract substantially higher parking requirements. Under the Telangana Building Rules framework, hotels, restaurants, lodges and other specified non-residential buildings are subject to the applicable non-residential parking norms. Therefore, an owner cannot necessarily avoid commercial parking requirements simply by calling a commercial lodging operation a homestay.

Fire safety is another area where care is required. It would be incorrect to assume that every homestay automatically requires exactly the same fire-safety infrastructure as a large hotel. At the same time, it would also be wrong to assume that calling a building a homestay completely removes fire-safety obligations. The applicable requirements depend upon factors such as the nature of occupancy, building height, built-up area, occupant load and the applicable Fire Services regulations. Where the building or activity falls within the relevant fire-safety categories, the necessary approvals and safety measures have to be obtained.

The Tourism Homestay Guidelines themselves contemplate guest safety and require information relating to fire-fighting equipment and other safety arrangements. A responsible homestay operator should therefore treat fire safety as a substantive obligation rather than merely a paperwork requirement.

Another misconception is that obtaining a trade licence, GST registration or tourism registration automatically authorises the building use. These are different regulatory matters. A tourism registration identifies and regulates the accommodation activity from the tourism perspective. Municipal building permission determines whether the building is legally constructed and whether the proposed use is permissible. Fire authorities examine fire and life-safety compliance where applicable. Land-use and zoning regulations determine whether the proposed activity is permissible at that location.

Therefore, the legal position can be understood as a chain: the land must permit the activity; the building must have valid sanction; the sanctioned use must be compatible with the proposed activity; the building must satisfy applicable parking and safety requirements; and the operator must obtain the necessary business or tourism registration.

The concept of homestay is valuable because it provides an opportunity for homeowners to participate in tourism without converting every residential neighbourhood into a hotel district. At the same time, the scheme should not become a mechanism for circumventing building regulations, parking requirements, fire-safety standards or zoning restrictions.

The real test, therefore, is not the name displayed on the property's signboard or the description used in an online booking platform. The real test is the substance of the activity. Is the owner actually living in the house? How many rooms are being offered? How many beds are provided? Who are the occupants? Are they tourists or long-term residents? Is the property being operated as a family home with limited guest accommodation or as a dedicated commercial lodging establishment? What does the sanctioned building plan say? What does the applicable zoning permit?

These questions are far more important than whether the operator calls the premises a "homestay", "guest house", "PG" or "serviced apartment".

The growing popularity of homestays is a positive development for tourism and local entrepreneurship. But their sustainable growth depends upon maintaining the distinction between a home that welcomes guests and a commercial lodging establishment operating under the label of a home. When that distinction is respected, homestays can provide visitors with an authentic local experience while enabling homeowners to participate in Telangana's expanding tourism economy without compromising urban planning, parking, building safety and neighbourhood interests.

In short, Telangana's Homestay Guidelines effective from 26^th July 2016 are designed to encourage small-scale, owner-occupied tourist accommodation, not to provide a route for converting an entire residential building into a hotel, PG or serviced apartment establishment without complying with the applicable municipal, planning, parking and safety regulations.

In conclusion, a genuine homestay in Telangana occupies a special position between ordinary residential occupation and commercial hotel accommodation. It is fundamentally based on a residential home in which the owner and family continue to reside while providing limited accommodation to visitors. The Tourism Department's homestay registration provides a regulatory framework for such activity, but it does not override municipal building laws or legalise an unauthorised change of use.

 

CURE Bill, 2026: Reform or Recentralisation?

Y. Babji, Legal Practitioner

Urban governance in India is at a crossroads. Rapid urbanisation, climate risks, infrastructure shortfalls, digital transformation and rising citizen expectations demand a modern legal framework that ensures efficient, accountable and participatory municipal administration. Hyderabad, one of the country’s fastest-growing metropolitan regions, faces these pressures acutely.

It is against this backdrop that the Telangana Government has published the Core Urban Region (Integrated Governance) Bill, 2026 to replace the Greater Hyderabad Municipal Corporation Act, 1955, and invited public suggestions. Modernising municipal law is both necessary and welcome. But reform must be measured against the constitutional principles that protect local self-government. The essential question is not whether the 1955 Act should be replaced, it should, but whether the CURE Bill strengthens urban democracy or erodes the autonomy of Urban Local Bodies guaranteed under Part IX-A of the Constitution. 

A short history of municipal governance in Hyderabad 

Organised municipal administration in Hyderabad dates back more than 150 years to the Nizam’s era, managing sanitation, roads, public health and municipal taxation. 

After integration into the Indian Union in 1948, civic administration was unified. The Hyderabad Municipal Corporation Act, 1955 merged Hyderabad and Secunderabad into the Municipal Corporation of Hyderabad, creating one of India’s most comprehensive municipal statutes. 

In 2007 the MCH expanded to become the Greater Hyderabad Municipal Corporation by incorporating surrounding municipalities and gram panchayats. Despite territorial expansion, the legal foundation remained the 1955 Act, amended over time.

Several surrounding municipalities were merged into GHMC and soon after that the city's municipal administration was trifurcated into Hyderabad Municipal Corporation, Cyberabad Municipal Corporation and Malkajgiri Municipal Corporation. Of course, a Future City is currently in its early planning, administrative setup and foundational infrastructure stage. 

The Government of Telangana, aligned with India’s India@2047 vision, promoted the CORE, PURE and RARE development ideas. This likely prompted the replacement of the 1955 City Municipal Act with the Core Urban Region (Integrated Governance) Bill, 2026. 

Why the CURE Bill? 

The Government cites pressing needs that the old statute cannot meet (1) Integrated metropolitan planning (2) Climate-resilient development (3) Digital governance (4) Coordinated infrastructure and unified service delivery and (5) Improved inter-agency coordination and sustainable urban management. 

These objectives are laudable. But modern legislation must also adhere to constitutional philosophy. 

Constitutional status of Urban Local Bodies 

Before the 74th Amendment, municipalities existed at the pleasure of States and often suffered suspension, dissolved councils, deferred elections and curtailed powers. 

The Constitution (Seventy-Fourth Amendment) Act, 1992 (effective 1 June 1993) changed that by inserting Part IX-A (Articles 243P–243ZG) and the Twelfth Schedule into the Constitution. The amendment envisaged vibrant democratic units of self-government with regular elections, financial autonomy and functional devolution. Article 243W empowers State Legislatures to devolve powers to municipalities so they function as institutions of local self-government. 

The Twelfth Schedule lists eighteen functions including urban planning, land use regulation, water supply, sanitation, roads, public health and more intended primarily for democratically elected municipal bodies. 

The spirit of decentralisation 

The constitutional philosophy is straightforward. Governance should move closer to citizens. The doctrine of subsidiarity requires decisions affecting citizens be taken, where possible, at the lowest competent level. Municipalities are thus intended to be autonomous institutions of self-government i.e. State role should be supervisory, not interventionist and that power should travel from State → Municipality → Ward → Citizen, not the reverse. 

Does the CURE Bill reverse this philosophy? 

A close reading of the draft Bill raises constitutional concerns. It proposes an elaborate metropolitan governance framework with multiple authorities, expanded regulatory powers and enhanced supervisory mechanisms. While such structures may improve administrative coordination, they can also dilute the democratic mandate of elected municipal representatives if decision-making shifts from elected councils to State-controlled authorities. 

The Constitution does not contemplate municipalities as mere administrative appendages. If integrated governance becomes centralisation in practice, the CURE Bill risks undermining the core objective of the 74th Amendment - to constitutionalise local democracy. The final outcome depends on the Bill’s text and the actual devolution of powers to elected bodies. Therefore, public consultation is crucial. 

Financial burden on households 

Media reports suggest the draft Bill contemplates revised property taxation, increased user charges, environmental compliance costs, fines, higher licensing fees and stricter obligations for property owners. While urban infrastructure needs funding, public finance must respect three constitutional principles: equity, affordability and transparency. 

Citizens will rightly ask 3 questions (1) Will service levels improve proportionately? (2) Will accountability increase? And (3) Will taxpayers get measurable value? 

If financial burdens rise without corresponding improvements in services and transparency, public resistance will follow. Hyderabad’s residents already pay property tax, water and sewerage charges, licence fees and development levies. Any new or higher charges must meet standards of fairness and proportionality. 

Accountability must accompany taxation 

Municipal governance must not become merely a revenue-collection engine. Citizens expect uninterrupted water supply, scientific waste management, durable roads, effective drainage and flood mitigation, transparent building permissions and responsive grievance redressal. Every additional charge or tax must be matched by measurable service improvements and clear accountability mechanisms. 

Democratic deficit 

Under the constitutional scheme, the elected Municipal Council should be the principal policy-making authority. Vesting significant powers in appointed officials or external agencies without parallel democratic accountability risks making decision-making more distant. Efficiency is essential, but it cannot substitute democracy. 

The Supreme Court has emphasised that the 73rd and 74th Amendments are meant to deepen participatory democracy. Hence, State legislation must preserve the identity of municipalities as institutions of self-government. 

Integration versus autonomy 

Hyderabad’s governance landscape includes multiple agencies — municipal corporations, water and sewerage board, electricity utilities, traffic police, development authorities, disaster management and transport bodies — that often operate in silos.

Integration and coordination are necessary. But integration should mean collaboration, not centralisation. The constitutional balance is enabling cooperation while safeguarding municipal autonomy. 

Five constitutional tests for the CURE Bill 

To pass constitutional muster and win public trust, the Bill should satisfy five tests: 

1. Does it strengthen elected municipalities?

2. Does it increase citizen participation?

3. Does it preserve financial autonomy?

4. Does it improve accountability?

5. Does it genuinely implement the spirit of Part IX-A? 

A “yes” to these questions would mark the Bill as progressive reform. A “no” risks turning it into an instrument of administrative centralisation dressed as integrated governance. 

Closing thoughts 

The GHMC Act, 1955 needs updating. Hyderabad in 2026 is a very different city than in 1955. Climate resilience, metropolitan mobility, digital governance, environmental sustainability and modern infrastructure demand an updated legal framework. But constitutional history warns us. The 74th Amendment did more than reorganise municipal functions as it constitutionalised local democracy. 

The CURE Bill’s success should be measured not only by administrative efficiency but by whether it strengthens democratic participation, municipal autonomy and public accountability. A modern municipal statute should not merely build smarter cities; it should cultivate stronger local democracy and an engaged citizenry. The true test of reform is power dispersed, not concentrated — enabling institutions closest to the people to make meaningful decisions about the places where they live. 

In keeping with the decentralisation spirit of the Constitution, the CURE framework should move from ‘Integrated Governance’ to a model of Coordinated Governance and Collaborative Governance, wherein strategic coordination rests with the CURE Governance Council and Executive, while operational powers and service delivery remain with constitutionally empowered local bodies through structured collaboration.