Increasing advances become a pain for many.
No one talks about deposits in IT cities like Bengaluru. Deposits are one reason for the heavy cost of living there. Having to pay the deposit upfront for 10 months at once is the real issue rather than the rent. The burden of this deposit is often quite high. Efforts have been made over the past three years to check it. But there hasn’t been much progress as hoped.
Even in the January-March period of 2024, rental deposits increased significantly. Compared to the past three months, if we look at it, there has been a 20 percent increase. Recently, the zero deposit rental scheme has emerged once again in Bengaluru. This method was introduced in 2022 through the No Broker data platform. It works quite well for properties like 2 BHK, 3 BHK, 4 BHK. As a result, from 2022 to 2023, there was a 400 percent increase in professionals aged 25 to 40 opting for it. If you deposit 6 percent of the annual rent in this scheme, it’s enough. For example, if the rent for a house is Rs. 25,000 per month, for ten months, it means Rs. 2.50 lakhs should be paid as an advance. Under the same zero deposit rental scheme, if you pay Rs. 15,000 per month, it works out fine. Discussions are ongoing for the past three months, but changes in the Karnataka Model Tenancy Act have not yet been finalized. If implemented, people need to pay only two to three months’ rent as a deposit.
A software engineer said that in Delhi, only two to three months’ rent is taken as an advance. In Bangalore, they ask for an advance of 6 months to 10 months. Another IT employee mentioned that finding a house with affordable rent and low deposit is a challenge. In this background, a zero rental deposit scheme will be very beneficial, they feel. Low rental deposit, zero rental deposit may not work out in Bengaluru. He said that many deposit the rental deposit in bank accounts and get 3 to 6 percent interest. On the other hand, the argument of the house owners is different. If there is any damage to their property, who will be responsible? In such a case, they say that they are taking a large amount as a deposit to avoid loss.
