Bengaluru's Exorbitant Security Deposits: A 2BHK Rented Out for ₹43,000 pm with ₹2.5 Lakh Security Deposit
Rents in Koramangala have grown roughly 5% year-on-year, with landlords charging high security deposits. Bengaluru's rental market is facing a crisis with tenants struggling to cope with ever-changing demands from landlords.
Bengaluru Real EstateKoramangalaRental MarketSecurity DepositsZero Deposit Rental SchemeReal Estate NewsAug 02, 2024
The listing included pictures of a fully-equipped kitchen, two bedrooms, and a living room in a multi-story building in a gated society. Koramangala is an upscale residential and commercial locality in Southeast Bengaluru, popular with young professionals and students. Property prices and rentals in this neighborhood are amongst the highest in the IT capital. Average rent for a 1 BHK unit in Koramangala hovers around ₹28,000 per month currently, with rents growing roughly 5% year-on-year.
Bengaluru's rental market is facing a crisis, with tenants struggling to cope with ever-changing demands from landlords. Some landlords have gone to the extent of checking profiles of tenants on LinkedIn, while property brokers have allotted appointments to tenants for interviews with the landlords. According to online property search portal NoBroker, rental yields in Bengaluru are amongst the highest across major cities in India, around 4-5%.
The average security deposit for rental housing in the city varies between 5-10 months of rent. Local brokers say that the practice of charging high security deposits is tied to an old mindset, which is slowly changing now. Landlords in Bengaluru traditionally charged 10 months of rent to hedge against the risk of property damage and tenants vacating properties on short notice. However, this is changing slowly, especially with regards to smaller properties, with landlords in areas like Indiranagar charging six months' rent as deposits now. The zero-deposit rental scheme has been launched in Bengaluru, under which the prospective tenant signs up a rental bond with the landlord and the third party executing it for a nominal one-time fee. The rental bond serves as a guarantee in favor of landlords, providing financial security in the event of tenant default.
Frequently Asked Questions
What is the average rent for a 1 BHK unit in Koramangala?
₹28,000 per month currently
Why do landlords in Bengaluru charge high security deposits?
To hedge against the risk of property damage and tenants vacating properties on short notice
What is the zero-deposit rental scheme in Bengaluru?
A scheme under which the prospective tenant signs up a rental bond with the landlord and the third party executing it for a nominal one-time fee, providing financial security in the event of tenant default
What is the rental yield in Bengaluru?
Around 4-5%, amongst the highest across major cities in India
How is the rental market in Bengaluru changing?
The practice of charging high security deposits is slowly changing, with landlords in areas like Indiranagar charging six months' rent as deposits now
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