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Old 18th February 2017, 12:33   #1
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Default Team-BHPian takes on extortionate Bangalore landlords with a PIL

http://bangaloremirror.indiatimes.co...w/57213341.cms

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Petition filed against landlords in B’luru insisting on 10-months’ rent as deposit

Extortion via high deposits demanded as ‘security’ bonds by landlords in Bengaluru must stop, says a group of petitioners — newcomers to the city and good Samaritans — have teamed up to protect the interests of tenants house-hunting in the city. The activists have filed a Public Interest Litigation in the Karnataka High Court addressing the interests of people who do not own homes but must rent housing under one-on-one tenancy agreements with landlords. Such laws already exist in states such as Tamil Nadu and Bihar, says Wasim Memon, founder of The Drive without Borders Foundation.

The Foundation, a citizens’ movement that started with the objective of safeguarding the rights of motorists and road users in India and crusaded for a single rate of road tax in all Indian states, is leading the charge.

Waseem Memon said tenants started contacting him on their Facebook page seeking help when faced by Bengaluru’s inequitable rental market. He, a Hyderabadi himself, decided to do something about it.
Waseem

Last edited by Rehaan : 10th March 2017 at 14:06. Reason: Replaced scanned news article with e-edition extract
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Old 9th March 2017, 13:42   #2
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Originally Posted by SILVERWOOD View Post
OOT.But worth a read.
Congrats on the verdict. Saw you speaking about it on news yesterday. It was also mentioned in a Kannada newspaper today (couldn't find the link now, sorry). Could you please post the details once you receive the copy of the order.

Thanks
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Old 10th March 2017, 11:40   #3
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Default Re: Out-of-state cars can run on Karnataka roads for 1 year!

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Congrats on the verdict. Saw you speaking about it on news yesterday. It was also mentioned in a Kannada newspaper today (couldn't find the link now, sorry). Could you please post the details once you receive the copy of the order.

Thanks
OT.But would make a sea of difference for tenants.

Will upload the certificed copy of the order and as when i receive the same.

Waseem.
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Old 10th March 2017, 13:45   #4
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Default re: Team-BHPian takes on extortionate Bangalore landlords with a PIL

Excellent initiative, Waseem. You are certainly doing us proud with these much-needed PILs. I experienced both sides- tenant and landlord- in my Bangalore days and agree that 10 months rent is simply extortionate.

Mod Note: Hived this interesting topic off as a separate thread.
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Old 10th March 2017, 14:49   #5
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Originally Posted by SILVERWOOD View Post
Nice work!
High time some action was taken against such landlords.

A regulator is needed to closely watch on how the landlords will react and try to circumvent the rules and adapt the laws to prevent them from getting away.

Similarly, there are many landlords who do not provide their PAN to tenants and expect tenants to somehow pay them while they avoid taxes.

It is also a sad state of affairs when such obvious issues require a PIL to get things rolling. Enforcing the law, of course, is quite another matter.
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Old 10th March 2017, 15:40   #6
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Default re: Team-BHPian takes on extortionate Bangalore landlords with a PIL

Prima facie I have realised that a constructive way is to address the home owners' concerns with regard to the safety of their building (problems related to tenants drilling large nails & rock bolts into the walls, columns & roof of the structure etc, thereby damaging & weakening it). Bottleneck : Who's to check which tenant may or may not do such acts. So there's the problem of uncertainty that's almost seemingly impossible to overcome.

6 to 10month security deposit seems more of a market derivative (even if its unique to Bangalore), meaning to say that as long as there are sufficient number of people who'll pay high deposits, the practice may stay (through indirect channels) even if there's a law capping such deposit.

There may be aggregators like Nestaway or people may form legal pressure groups with agents to convince home owners. A year or so back I'd read up about a similar high rent & deposit problem in San Francisco. There was a very skewed solution proposed, which took off but fizzled out after a short stint. Can't remember exact details, but my limited understanding EoD was that, based on free market rates, at best one may only expect a peaceful commercial engagement.

P.S. : Most people put their life savings into construction of a building. Not to forget the sheer effort of making sure bad material isn't used in ensuring a building is safe for occupancy & peaceful to live in. I guess the high security deposit can at worst be considered as protectionism by most landlords, probably not as serious as "extortionate".

OT
: I think the success will be limited for those looking for renting a property that has many positives WRT locality & direction (for ventilation & sunlight). For the foreseeable future I suggest people try building owners with loans who've gone G+4/5. They'll likely be successful in convincing for the higher floors atleast.

Last edited by GrammarNazi : 10th March 2017 at 15:52.
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Old 10th March 2017, 16:02   #7
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Default re: Team-BHPian takes on extortionate Bangalore landlords with a PIL

Renting out a premise is a business endeavor, living on rent is not. Premises getting damaged is part of business risk and security deposit is a risk mitigating step. Having cleared this much, my 2 cents (being an owner of rented house in my hometown , and a tenent in my place of work):

1. Tenants pay to the tune of 3 Lakhs per year to landlords as rent (Rs 25000 rent per month), besides paying for society maintainence etc (which they will not be using once they move out).

2. Frequently changing houses is pretty expensive exercise, and painful too.

3. A nominal (about 2 months' rent) as security is understandable, for compensating any repair work that needed to be done (plugging small drill holes, water taps, whitewash etc) if tenant has really abused the property in which only they are living.

4. 9 month's rent as security is plain robbery, period. Just a way to get extra liquid money, and keep rotating that by paying back the amount to the tenant who is vacating after new tenant has paid the security deposit (and earning free interest). Compare that to a tenant who had to vacate the premises (for whatever reasons). He/she would need to arrange for 9-10 months' worth of rent to book another rented accomodation again, and then wait for the previous landlord to pay back his/her money as per his/her convenience.

There is no level playing field here.

Last edited by Nav-i-gator : 10th March 2017 at 16:04.
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Old 10th March 2017, 16:08   #8
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Default re: Team-BHPian takes on extortionate Bangalore landlords with a PIL

I am a landlord and a tenant as well. I maintain my rented accommodation as neatly as I maintained my own house. I cannot say the same about the tenants I have had so far. I paid 10 months as deposit and receive 6 months as deposit. I have no opinion on what the deposit should be. It should be left to the landlord and the tenant. If people don't want to pay what the landlord asks, move on and find what fits into your budget. No one is forcing anyone to take what they don't want to pay for.

I fail to understand what are we trying to achieve out of this activity?

If the deposit is fixed to 3 months, how will the landlord recover the damages that some of the bad tenants cause to the property? To paint a 2 BHK takes a minimum of 30k here in Bangalore.
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Old 10th March 2017, 17:07   #9
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Default re: Team-BHPian takes on extortionate Bangalore landlords with a PIL

I am an owner and tenant in Bangalore. I have collected (as owner) and given (as tenant) 10 month advance. I agree it is an excess amount. One doesn't need more than 3 months of rent as advance. Thanks Waseem for this initiative, this dirty cycle must be broken.

Bad tenants are not in the majority. One should not punish the majority of tenants just because some tenants are bad. Just be more careful while renting.
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Old 10th March 2017, 17:21   #10
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Default re: Team-BHPian takes on extortionate Bangalore landlords with a PIL

There never is a rule. 10 months is the max somebody charges. For ex, I have given out my house at a 5 month deposit.

See, it is the market demand and supply that decides such things. If the govt makes it a law and stipulates a limit of say 3 months, the landlords would happily add the loss to the rent amounts.

"Nature finds a way", said Ian Malcolm.
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Old 10th March 2017, 17:45   #11
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Default re: Team-BHPian takes on extortionate Bangalore landlords with a PIL

I have been on both sides (tenant and landlord). I hated the ROI and the hassle as a landlord and I quickly disposed off any little real estate I owned to avoid the headache of renting. No sensible tax-paying person would invest in apartments for rental income.

In my humble opinion, this 10-month deposit actually helps the tenant to rent a place quickly. In the absence of a significant deposit, the tenant will be subjected to painful 'qualification/matching' procedures. My guess is most landlords use 10-month deposit as measure of "credit worthiness" of the tenant and as a means to filter out potential defaulters. It has very poor economic value. No matter how much abuse the properties receive, the norm is max one month deduction so there is hardly any advantage in having a larger deposit.

Rental accommodation is heavily subsidised in the cities thanks to the craze for investing in real estate assets driven by cash economy. A 3Cr unfurnished apartment in the CBD in Bangalore would fetch about 50K pre-tax rent where the owner has to pay the maintenance charges. A lousy ROI for the tax-paying-type landlord and a fantastic deal for the tenant. I always felt sad for the landlord whenever I stayed as a tenant because I understand the poor ROI especially for higher end accommodations. Most people deduct 1-month rent at the end of the lease (some return full) which is inadequate to undo the abuse the premises receive.
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Old 10th March 2017, 17:46   #12
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Default re: Team-BHPian takes on extortionate Bangalore landlords with a PIL

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Originally Posted by Samurai View Post
Bad tenants are not in the majority. One should not punish the majority of tenants just because some tenants are bad. Just be more careful while renting.
I beg to differ sir. Myself and many in my family circles have had quite a bit of bad experiences. The house rented out by my parents is in such a bad shape and the tenant uncaring that we sometimes feel they should be evicted. But they are not so good economically that we felt it would be too harsh on them. But there is a limit to everything. My house which is rented out in Hyderabad has scratches all around the walls in the hall due to tenant using sofas that have jagged edges that are in contact with the wall. Just to be clear, I did not even ask for a deposit from this guy because I had to move abroad at a short notice and it was a win-win then. Do you think he will be ready to bear even half of the cost it takes to repaint the room? BTW just to be clear, in Hyderabad, the max deposit people ask is just 2 or 3 months.

It is a double-edged sword for sure. As civic-sense mentions, the only way around is to increase the rent. Spending so much money to build a house and watch it rot away in hands of unscrupulous tenants.
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Old 11th March 2017, 00:14   #13
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Default re: Team-BHPian takes on extortionate Bangalore landlords with a PIL

In my familys' experience, 8/10 of the tenants had been terribly^5 bad. 6 of those were truly deliberate litigants in disguise of tenants. 2 of them lived in one of my property for a 3 decades with unbelievably low rents (say just 10k rent while the rate in the neighborhood was 1-1.5Lakh) because of the great Rent Control Act of Karnataka.

The laws & court procedures were super painful & life-damaging, the whole system was (& still probably is) terribly skewed towards the unfair party whos readily happy to spend while we were stupidly under the impression that law & the legal system will help us. By the time we realised nothing works with normal fees, new interested parties (lawyers, there I said it!) had completely complicated the situation.

People say once bitten, twice shy, but we were left smothered - financially, emotionally. Can't keep count of the opportunities we lost due to the constraints. Due to this we stopped giving the property on rent itself. Till recently it was decided that we'd rather sell, even at lower prices. We've stopped residential capital investments in this country.

You'll may think we're over reacting, but 100% guaranteed if you had been through that traumatic phase, you'd have made similar if not more stern decisions. We've now made better drafted 11 month agreements, but still find tenants trying to take advantage of our soft personal nature.

You say bad tenants are an exception, I completely disagree. And most of those who're half-decent, their moral compass loses direction when they get in touch with mischievous (understatement) lawyers. We put life savings in buying land & constructing, and then tenants want to take away the one basic leverage that protects us ? No way.

Last edited by WorkingGuru : 11th March 2017 at 00:19.
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Old 11th March 2017, 08:38   #14
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Default re: Team-BHPian takes on extortionate Bangalore landlords with a PIL

Evicting a tenant anywhere in India, even for non payment of rent, is an exercise in futility if you go through the legal system, and will take many years.

There's a flourishing "eviction business" run by local goons, municipal corporators etc that will charge you say 75k to a lakh or more to evict the tenant, sometimes by "persuasion" - very polite speech but significant because of the reputation of the guy who is speaking - and other times by turning up at the house with a lorry, physically bundling out the goods and pushing out the tenant (which is much rarer in this day and age of closed circuit cameras). Reminds me of The Godfather.
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Old 11th March 2017, 08:55   #15
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Default re: Team-BHPian takes on extortionate Bangalore landlords with a PIL

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I beg to differ sir. Myself and many in my family circles have had quite a bit of bad experiences. The house rented out by my parents is in such a bad shape and the tenant uncaring that we sometimes feel they should be evicted.
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Originally Posted by WorkingGuru View Post
In my familys' experience, 8/10 of the tenants had been terribly^5 bad. 6 of those were truly deliberate litigants in disguise of tenants. 2 of them lived in one of my property for a 3 decades with unbelievably low rents (say just 10k rent while the rate in the neighborhood was 1-1.5Lakh) because of the great Rent Control Act of Karnataka.
Granted, bad tenants may not be an exception. I was wrong going by only personal experience.

But do explain, how does 10 month advance solve the problem of bad tenant?
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