Bengaluru's Sky-High Rental Deposits: Why Landlords Demand Fortunes from Tenants

In Bengaluru, renting a home often comes at a steep cost, with landlords demanding unusually high security deposits. A recent listing in Bennigana Halli, North Bengaluru, asked for a staggering ₹23 lakh deposit for a 4BHK, nearly a year’s rent, triggering outrage on social media. Many users pointed to a ‘low-trust society’, ‘greediest landlords’ and the rising cost of housing as key reasons behind these soaring demands.

Industry experts say the sharp rise in property prices, combined with a steady influx of working professionals, has enabled landlords to justify such hefty deposits as a safeguard against tenant defaults and to protect their investments.

While deposits of 10–12 months’ rent are increasingly becoming the norm in the city, the absence of regulation stands out. Unlike Mumbai or Delhi, where rental deposits are typically capped at 2–3 months’ rent, Bengaluru’s rental market remains largely unregulated, exposing a structural imbalance that favours landlords, say real estate experts.

“Bengaluru landlords are the greediest in the world. ₹23 lakh deposit is OUTRAGEOUS,” the user wrote on social media platform X. The post highlighted how rental deposit norms in global cities like New York, Toronto, Singapore, London, and Dubai are far more tenant-friendly, typically capped at just one to two months’ rent, or 5–10% of annual rent. In contrast, Bengaluru’s standard 12-month deposit stands out as unusually high.

Sunil Singh, director of Realty Corp, told HT.com that steep rental deposits have become the norm in Bengaluru, especially in the premium and luxury segments. He recently closed a deal for a villa in Prestige Golfshire, near scenic Nandi Hills in North Bengaluru, where the tenant is paying ₹4 lakh monthly rent with a ₹20 lakh security deposit.

“It was a 10,000 sq ft luxury villa, and these kinds of deposits are now common, typically six to eight months’ rent for high-end properties,” he said.

Singh said that in a listing he's handling on Cambridge Road, a central Bengaluru location, the landlord is demanding an ₹8 lakh deposit for a 2,200 sq ft apartment with a monthly rent of ₹1 lakh. “But there’s room for negotiation these days; tenants are more aware and pushing back. And, we often see owners settling for a four to six months’ deposit,” he noted.

However, Singh pointed out that many landlords still prefer to “take a chance” in case they find a tenant willing to meet the original terms. “If someone is able to pay ₹1 lakh rent, landlords assume they can also afford a ₹6-8 lakh deposit,” he said.

Although the Union Cabinet approved the Model Tenancy Act in June 2021, which proposes capping security deposits at two months’ rent for residential properties, Karnataka has yet to implement it. Legal experts say this lack of state-level regulation has enabled landlords in Bengaluru to continue demanding exorbitant deposits, often citing protection against rent defaults or property damage as justification.

Real estate experts say Bengaluru’s surging rental demand has tilted the balance of power in favour of landlords, enabling them to impose steep terms that tenants often have no option but to accept. The city is known for its unusually high rental deposits, usually ranging from 6 to 10 months’ rent, setting it apart from other Indian metros that have moved toward more tenant-friendly norms.

With property prices climbing and a constant influx of working professionals, landlords argue that these hefty deposits protect against potential tenant defaults and help safeguard their investments, experts add.

“In several parts of the city, affordable rental homes are limited, leading to intense competition among tenants. As a result, landlords are raising rental deposits, often demanding what they want without much room for negotiation,” Kiran Kumar, vice president at Hanu Reddy Realty, said.

Singh believes the government should consider a more structured deposit system, similar to models used in Australia and parts of Europe. “There, tenants deposit the money in a government-registered bank and receive a bond in return. Once the tenant vacates and the owner confirms that the property is in good condition, the deposit is released by the bank. This adds transparency and protects both parties,” he said.