A rent crisis in India is crushing hopes and dreams

Actor Kamakshi Bhat got a surprise text from her landlord in Mumbai in February that the monthly rent for her 3BHK flat had been hiked to Rs 84,000 from Rs 64,000. Pay up or leave, she was told.

Sanchi Mishra, a marketing professional, saw her rent in Bengaluru surge by Rs 20,000 to Rs 65,000 since last year. A 44 per cent increase in just a year forced her to shift from Bengaluru to Gurugram.

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Eshwar, a media professional in Noida, was under the burden of loans he had taken for a health emergency when his landlord told him that the rent for his flat was being raised by Rs 7,000 to Rs 27,300. He was also forced to pay an additional security deposit.

Leaving the comfort of home to pursue opportunities in new cities is what millions of young Indians do every year. It's not just about leaving homes; it's about finding a new one in a new city.

But as aspirations soar in ‘New India’, the struggle to find affordable housing in cities like Bengaluru, Delhi, Mumbai, Pune, Hyderabad, Noida, and Gurugram intensifies.

Data from property consultancy firm ANAROCK Group sheds light on how, on average, there has been a 4-9 per cent jump in housing rent in just the first three months of 2024.

“This is significant because typically, average rentals in a year rise anywhere between 5-10 per cent. Such a growth in just one quarter is indeed significant,” said Santhosh Kumar, Vice-Chairman of ANAROCK Group.

This signifies a four-fold surge in house rent within just a year in several cities.

“Considering that rents go up annually by 10 per cent, this 30-40 per cent increase is huge. A sudden increase affects the tenants also because there has not been a hike in three years,” said Manju Yagnik, Vice-Chairperson of Nahar Group and Senior Vice-President of NAREDCO- Maharashtra.

This is exactly what happened with actor Kamakshi Bhat.

The monthly rent for her 3-BHK flat in Mumbai's Versova skyrocketed by 31 per cent. She had been paying Rs 64,000 per month since September 2021, but she was told living there would cost Rs 84,000 per month now.

Ayushi Ashar, Ashar Group & Member of the Managing Committee of MCHI-CREDAI, provided some key insights on housing rent trends in some cities like Mumbai, Noida, and Bengaluru.

“In Mumbai, for example, the average monthly rent for a two-bedroom apartment has surged to Rs 45,000 in the first quarter of 2024, marking a staggering 30 per cent rise from pre-pandemic levels,” she said.

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“Similarly, Noida and Bengaluru have experienced significant spikes, with average rents hitting Rs 32,000 and Rs 38,000 per month, respectively, reflecting increases of 25 per cent and 22 per cent since 2022,” she added.

This has resulted in crushing financial and mental stress for millions of young working professionals living on rent in these cities.

IndiaToday.in spoke to tenants in these cities, and their stories paint a grim picture. Once a comforting constant during the pandemic, rents have now morphed into a relentless burden.

To many, the dream of affordable housing feels like a cruel joke, leaving them grappling with financial strain and a sense of despair. It's not just the rent, some have been forced to pay higher security deposits too.

'PAY UP OR LEAVE'

Kamakshi Bhat, an actor settled in Mumbai, shares a 3-BHK apartment in Versova with a flatmate. They have been paying Rs 64,000 as monthly rent since September 2021.

Recounting how the apartment owner caught her off-guard by suddenly demanding a higher rent, Kamakshi said, “In February 2024, we randomly got a text from the owner saying that the rent was now at Rs 84,000. If it doesn't suit you, you may leave after a month of notice.”

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Kamakshi and her flatmate scrambled to find a solution – searching for a third flatmate to share the rent load while simultaneously hunting for cheaper flats.

Their efforts were met with disappointment. “Obviously, we could not look for a new one in just 30 days. We could not get a third person to share, either. Our situation was such that we had to comply,” Kamakshi said.

They are now paying Rs 84,000 in rent per month, a hike of 31 per cent.

Kamakshi firmly believes the owner's demand was "not only unethical but also illegal".

The rent-control and tenancy laws stipulate that rents for non-commercial buildings can't be hiked by more than 10 per cent a year (or on lease expiry). However, flat owners circumvent the laws by drawing up new agreements with unusually high rent hikes.

Kamakshi went on to explain how the increased rent not only impacted her savings but also caused immense stress, especially because she is an actor without any fixed monthly income.

“If you live in Bombay, the rent is always at the back of your mind. Sometimes, I think of taking a break from films and trying out theatre for six months, since theatre doesn't pay well, that paradox keeps going in my mind,” said Kamakshi, revealing her Catch-22 situation.

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She said it was mentally and physically taxing to always keep budgeting the high rent.

NOT JUST RENT, SECURITY DEPOSIT ALSO HIKED IN NOIDA

Eshwar, a media professional in Noida, echoed Kamakshi Bhat's sentiment. A sudden demand for a higher rent left him feeling financially vulnerable and emotionally drained. That too when he was dealing with a health emergency.

"I have been living in my apartment since 2018. After 2020, the landlord didn't raise the rent until December 2023, when he suddenly increased it from Rs 20,000 to Rs 27,300 per month (including society maintenance)," he said.

While the increased rent was part of the burden, it was the demand for an additional security deposit that stunned him. "What really messed me up was the request for a fresh deposit of Rs 33,500, bringing the total to Rs 50,000," Eshwar said.

With just 20 days to decide, the pressure mounted, especially since he was already under the burden of loans he had taken earlier that year due to a health emergency.

"For someone who has been living in his house and regularly paying rent and housing society maintenance all through the six years of tenancy, raising the security deposit really felt disrespectful and inconsiderate," he added.

SUDDEN HIKE IN HOUSE RENT IN DELHI, GURUGRAM, NOIDA

Eshwar's story resonates with many grappling with similar dilemmas in the rapidly expanding cities of the National Capital Region (NCR), especially Noida, where housing rents have skyrocketed nearly 100 per cent since 2017, with a sharp 30-40 per cent spike in 2023 alone.

Individuals living on rent in Noida and Gurugram, two prominent NCR hubs, faced similar predicaments, compelled to comply with sudden rent and deposit hikes.

The rent crisis is forcing people to compromise on the area they want to reside in and the kind of house they would have liked to stay in.

Shikhar Mishra, a Gurugram resident, went on an arduous house-hunting journey for over 2 months. He was looking for a fully furnished apartment but was forced to settle for an unfurnished flat due to exorbitant rent demands.

“What should have been a 15-20 day flat hunt turned into two months. I got a place in November 2022 but had to compromise. The 2-BHK flat that was in my budget was not furnished. But I had to move in. The kind of furnished flats I was eyeing was quoted at around Rs 50,000-Rs 60,000 and beyond my budget,” Shikhar said.

Noida and Gurugram may not be among the four metro cities (as per HRA rules under the Income Tax Act), but house rents in these two cities have surged alongside other non-metro hotspots like Bengaluru, Pune, and Hyderabad.

BENGALURU HIGH RENT HITTING PROFESSIONAL CAREERS

The rent crisis is also hitting professional careers by making people move out of cities they prefer.

Sanchi Mishra, a marketing professional, saw her rent in Bengaluru's Whitefield area surge by Rs 20,000 from Rs 45,000 to Rs 65,000 last year. That is a 44 per cent increase in just one year.

On top of that, she was shelling out Rs 12,000 in maintenance charges every month. That took her total rent to Rs 77,000 per month.

Sanchi Mishra loved her job in Bengaluru, but the skyrocketing rent forced her to shift cities, and she landed in Gurugram.

"In Whitefield, it took me an hour to travel 7 kilometres to reach any central area. The commute was always a mess. Dining was comparatively expensive, or at least I felt so. So were the cleaning services," Sanchi tells IndiaToday.In.

She is paying Rs 49,000 on house rent in Gurugram now.

"In Gurugram, we are paying Rs 49,000, inclusive of maintenance, in one of the best areas of the city, compared to what Whitefield is," adds Sanchi Mishra.

India’s Silicon Valley, Bengaluru, which Sanchi Mishra left, has one of the highest average housing rents among tier-1 cities.

Avg. Rent for standard 2BHK unit of 1,000 sq. ft. area (INR/month) Cities Micro Markets 2022 2023 Q1 2024 Gurugram Golf Course Road 37,000 41,500 43000 Sohna Road 28,500 32,700 34300 New Gurugram 22,500 25,500 26500 Sohna 16,000 18,000 18900 Bengaluru Sarjapur Rd 24,000 31,600 34000 Whitefield 22,500 30,200 32500 Hyderabad HITECH City 24,600 31,000 32500 Gachibowli 23,400 30,500 32000 MMR Chembur 51,000 60,000 62500 Mulund 41,000 46,500 48200 NCR Sector-150 (Noida) 19,000 22,000 24000 Dwarka 22,000 25,800 27400

“If we compare rentals between 2022-end and Q1 2024, top localities in Bengaluru have seen rentals go up by more than 40 per cent,” ANAROCK Group’s Santhosh Kumar said. It still stands out among the top seven cities with the highest housing rents.

Axis Ecorp CEO and Director Aditya Kushwaha said Bengaluru has cemented its status as the country’s “hottest residential market” and acknowledged that rents have nearly doubled since the beginning of 2023.

What makes the situation in the city far worse is the demand for inflated deposits. The excessive demand from house owners/brokers in Bengaluru comes at a time when most offices are calling their employees back to work. And the situation has become nightmarish for fresh-out-of-college professionals.

Sumit Saurabh, a Bengaluru-based engineer, highlighted that renting a flat is out of reach for most freshers, who do not earn more than Rs 40,000 on average a month.

“Renting a flat is quite a difficult task as mostly you would encounter brokers who charge 1-1.5 month rent as brokerage. It’s common practice to pay in advance (deposit), which generally is 4–5 months of rent. So this can easily go to over Rs 1 lakh,” Sumit said.

“The only option for young professionals is to live in a PG hostel,” he said.

But even PGs are going out of reach in Bengaluru.

Richa Singh, a media professional who lives in a PG accommodation in Bengaluru, said her monthly rent shot up by 15 per cent in just six months after moving in.

“It is shocking to me,” Richa said, highlighting that the rising rent just adds to the financial burden of living in the city, factoring in the overall high cost of living in Bengaluru.

DECODING THE GREAT INDIAN RENT CRISIS

What exactly are the factors behind such drastic house rent spikes in metro and non-metro cities across India?

Priyatham Kumar, Founder of Homes247, attributed the sharp rise in rent in non-metro cities like Noida and Bengaluru to a surge in demand for housing units, fuelled primarily by population growth and rising demand.

“This surge in demand, coupled with steady borrowing rates, has led to higher housing prices, subsequently impacting rental rates,” added Kumar.

The booming real estate market has played a big role in pushing up rents, even in non-metro cities, said Sarveshaa SB, Chairman and Managing Director of BHADRA Group, a leading Bengaluru-based real estate developer.

“This is because IT workers are slowly moving back into office areas, and a lot of young people are moving to cities to find work. The problem is that there are not enough rented homes to meet the high demand. There have been a lot fewer new rental units coming on the market, with some sources saying the drop is as big as 16.9 per cent year-on-year,” Sarveshaa SB told IndiaToday.In.

“This disparity affects cities like Noida and Bengaluru, which are important to many businesses,” he added.

Rapid urbanisation in non-metro cities and ease of living are two factors that have led to a surge in housing rents, Jash Panchamia, partner at Suraksha Group, told IndiaToday.In.

Speaking specifically about Noida, he said, “It has been one of the emerging choices for rental spaces owing to the essential infrastructure developments in the city like Jewar airport, development, and connectivity across Yamuna Expressway being part of the UP growth story.”

Panchamia feels that the non-metros in India will “continue to see a surge in demand for rented spaces”.

Ashar Group’s Ayushi Ashar also attributed the rising house rents across India to higher disposable incomes and a desire for more living space and evolving lifestyles.

While this indicates that many with higher incomes are willing to pay more rent for better housing and facilities, a larger number of people are struggling to cope with the ongoing rent crisis.

Another reason why tenants are feeling the pinch of higher house rents is directly related to a growing number of luxury projects, which attract high maintenance costs.

“Property developers and landlords, in a bid to maintain their profit margins, often transfer the burden of escalating costs of building material and labour expenses to tenants through increased rents,” noted Nahar Group’s Manju Yagnik.

She also said property owners were charging higher rents to make up for the surge in property taxes and other associated expenses.

NOWHERE TO RUN AS TIER-I CITIES ALSO SEE A RENT CRISIS

Sanchi Mishra was forced to leave Bengaluru and settle in Gurugram because of the exorbitant hike in rent. There are not many places that young professionals can move to and escape the rent turmoil.

People in Pune and Hyderabad, too, are grappling with soaring housing costs.

“The rental growth in Hyderabad and Pune is because the two are IT/ITeS-centric cities,” explained ANAROCK Group’s Kumar.

Shruti Bharuka, an IT engineer settled in Pune, said when she moved to the city last year, brokers in Hinjewadi were quoting Rs 51,000 for a 3-BHK fully furnished apartment. This, along with a deposit of Rs 51,000 and a brokerage fee of Rs 51,000.

She could only afford this house because it was on a six-person sharing basis, with the rent coming to Rs 8,500 per head. However, in just a year, the rent increased to Rs 57,000 or Rs 9,500 per head.

Shruti had initially tried looking for a 1BHK flat, but backed out due to the high brokerage and security deposits.

The situation in Hyderabad is equally alarming, with housing rent rising 25-30 per cent in 2024 in comparison to 2019. There has been an increase even in semi-urban areas, indicating that low-cost renting options are slowly disappearing.

Ishan Moitra, a medical researcher who moved to Hyderabad during the second Covid-19 wave in early 2021 said he rented a flat for Rs 13,500 per month in Bachupally. He got the flat at a cheaper price than usual due to the pandemic, but added that rents have gone up as people are no longer working from home and have moved back to the city.

The ongoing rent crisis across India is worsening every quarter, with house owners blatantly flouting rules by arbitrarily increasing rents and asking for security deposits exceeding two months.

While the growth of India’s property market is good for the country’s economy, the harsh truth is that house owners are piggybacking on this trend to exploit young working professionals living in rented flats.

As rent prices soar to new heights, young Indians migrating to new cities in pursuit of their dream find themselves caught in a nightmarish cycle of stress and financial distress. Each rental increase becomes a glaring reminder of the widening gap between ambition and affordability, leaving many with their dreams hanging precariously in the balance.

(With inputs from Sushim Mukul and Sonu Vivek)