Taking a house on rent in big cities of the country is becoming increasingly expensive. Not only the rent but also the huge security deposit is putting a big burden on the pockets of the tenants. According to a report by proptech company NoBroker, around ₹1.26 lakh crore of tenants in the country’s six major metros Mumbai Metropolitan Region (MMR), Bengaluru, Delhi-NCR, Chennai, Hyderabad and Pune are stuck in the form of security deposits with landlords.
According to the report, the highest security deposits are in Mumbai at ₹41,156 crore and in Bengaluru at ₹31,628 crore. It is clear from this that to rent a house in these cities, people have to deposit a huge amount in advance.
Excessive security deposit is becoming a big problem
The report revealed that 75% of the tenants in Bengaluru admitted that due to the high security deposit, they were sometimes unable to get the house of their choice. This means that for many people, not the rent but the initial deposit has become the biggest hurdle in choosing a house.
At the same time, the situation in Delhi-NCR was relatively better. Here 58% of the tenants got their entire security deposit back after the lease ended. However, some amount was deducted from the deposits of about 30% of the tenants, while 12% of the tenants faced a dispute regarding the return of the deposit.
Rent is eating up a big part of the income
The report shows that rent has become the biggest expense in the monthly budget of most people living in cities. Nearly half of the tenants are spending more than 30% of their monthly income on rent alone.
The situation in Mumbai is most challenging. Here 25% of the tenants spend more than half of their income on rent, while about 15% are paying 41% to 50% of their income on rent. This means that almost 4 out of every 10 tenants in Mumbai are spending more than 40% of their income only on house rent.
Living on rent has become easier than buying a house.
According to the report, now buying a house has become more expensive than before. In almost all big cities, the monthly EMI of a 30 year home loan is much higher than the rent of the same house. This is the reason why many people are not able to buy their own house even if they want to and are forced to live in a rented house for a long time.
Experts believe that rising property prices and expensive home loans are increasing the trend of “forced tenancy” in urban India.
More profitable deal for small flat investors
The report also revealed that 1BHK and studio apartments have emerged as the best options for investment. These are giving higher rental yield than bigger flats. Rental yield of 4.8% was recorded in Bengaluru and 4.6% in Hyderabad, which is the highest among major cities. Whereas in big flats like 4BHK, the rental yield remains less than 3%.
According to the report, the housing market of urban India is changing rapidly due to rising rents, high security deposits and expensive properties. In such a situation, it has become more important than ever for both tenants and investors to take informed decisions.
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