Team-BHPian takes on extortionate Bangalore landlords with a PIL

MCR · 14th March 2017, 16:00

This is absolute Hara-Kiri!

How does any landlord even know whether the tenant will even comeback. What if the tenant just vacates in the middle of the night, throwing away the key? What if the house is completely damaged, like walls having multiple holes, cracks etc. The risk is more in case the landlord doesn't stay in the same building!

So IMHO, Advance is necessary to ensure commitment and respect to others property. Else, knowing our mentality and the law finding houses for rent by people not willing to pay advance will be impossible.

Nav-i-gator · 14th March 2017, 16:19

Quote:

Originally Posted by MCR

This is absolute Hara-Kiri!

How does any landlord even know whether the tenant will even comeback. What if the tenant just vacates in the middle of the night, throwing away the key? What if the house is completely damaged, like walls having multiple holes, cracks etc. The risk is more in case the landlord doesn't stay in the same building!

So IMHO, Advance is necessary to ensure commitment and respect to others property. Else, knowing our mentality and the law finding houses for rent by people not willing to pay advance will be impossible.

This is not happening in cities where security deposits are low, not happening in towns where there is no security deposit concept at all (and where law & order situation is worse than in Bangalore). This is pure panic and nothing else. Owners are required to verify tenant background details and get it verified by police before renting out the property.

theMandarin · 14th March 2017, 16:29

I think the underlying question in this debate is that how can this practice of a 10 Months’ rent be justified for Bangalore while the risks/benefits with this endeavor are no different than if the property was in Mumbai/Delhi or any of the Tier 1 cities.

I am living in a rented PG accommodation in Gurgaon which is a very lucrative business here. Buildings are designed specifically for renting and then let out to caretakers for a fixed monthly cost for the entire building. The caretaker is then responsible for renting out individual rooms/floors and deciding his profit margins.

The reason I’m saying this is that since the primary objective is renting out, the furnishing is just the bare minimum standard expected based on the rent demanded. So the room has a cheap CRT TV, simple bed and so expensive furniture. This will change to say a LCD TV as the rent goes up but the owner/caretaker has carefully identified the amount of risk that he is willing to take and therefore does not need to question too much on the type of tenants. The advance asked in of 1 month rent.

If this was an individual property say a flat/house given for rent, the owner would definitely follow a vetting process to ensure his risk is minimized. I have practically seen this happen where a property is rented to PSU bank employees since it is almost guaranteed that a transfer will happen in 3 years and their rental income is assured directly from the bank. The advance I have seen is 2 months rent.

From my limited experience, I have seen that owners have repainted the property out of their own pocket albeit by doing the bare minimum in terms of quality to keeps costs/risks in check.

In both of these cases, the property owner has determined the amount of risk involved and the rent will reflect that. Bangalore will have the same challenges then how is a 10 month advance justified?

I say justified because, technically I cannot demand a fair price as it will vary from person to person based on their expenses. I am in the early stages of my career and I just cannot afford coughing up 10 months of advance rent. I might have to ask for funds from my family but then that won’t be an option for everyone. Even my employer offers 2 months of salary advance specifically for this purpose.

So the question is whether these high rent advances are justified considering that all risks are constant everywhere.

ashokrajagopal · 14th March 2017, 16:49

Quote:

Originally Posted by MCR

This is absolute Hara-Kiri!

How does any landlord even know whether the tenant will even comeback. What if the tenant just vacates in the middle of the night, throwing away the key? What if the house is completely damaged, like walls having multiple holes, cracks etc. The risk is more in case the landlord doesn't stay in the same building!

You mean getting a different lock and key to your house costs more than 2-3 months of rent ?

Walls having holes can obviously be fixed by with a few thousands. If your tenant actually broke down your house ( literally broke it down), then obviously the 10 months rent is of no use anyway.

sdp1975 · 14th March 2017, 16:56

Is the deposit really 10 months these days ? Looks more like 6 months . I checked this FB group and these are some ads I found with the rent and deposit details :

Quote:

We are looking for tenant to occupy semi furnished 2bhk flat .
Deposit Only 6 Months of Rent

Quote:

Urgent requirement for a room mate in a fully furnished 2bhk..
Deposit-20,000..
Rent -4000

Quote:

1RK - HSR Sector 1
Rent -8K and deposit 40K

Both the rent and deposit can be negotiated down further. With the glut of properties available for rent , the deposit amount has come down.

Guite · 15th March 2017, 14:28

10 months rent as security deposit is a lot of liquid cash blocked away. Moreover there is also fear that landlord may not return the amount speedily at the end of tenure. I am just wondering whether bank guarantee will work in this kind of case. Or will it complicate the matter more. Of course a bigger question is whether banks will want to get involved.

noopster · 15th March 2017, 14:34

Actually 5-6 months as deposit is not uncommon. As a former Bangalore landlord, that's what I took from my last tenant. But by then he'd already been our tenant for a year and we revised the terms during renewal. His payment track record held him in good stead as did the fact that the home was very well maintained.

10 months *is* extortionate but the problem in proactively offering to reduce it is that prospective tenants automatically assume you are hiding something. Since a number of tenants either split the deposit (when renting to singles) or get it paid through company (in case of CLA), the temptation to charge the full 10 months deposit for a landlord is high. As such the PIL is well-intentioned but it takes more than legislation to change mindsets.

14th March 2017, 16:00	#61
MCR BHPian Join Date: Aug 2009 Location: BLR/MYS Posts: 885 Thanked: 644 Times View My Garage	Re: Team-BHPian takes on extortionate Bangalore landlords with a PIL This is absolute Hara-Kiri! How does any landlord even know whether the tenant will even comeback. What if the tenant just vacates in the middle of the night, throwing away the key? What if the house is completely damaged, like walls having multiple holes, cracks etc. The risk is more in case the landlord doesn't stay in the same building! So IMHO, Advance is necessary to ensure commitment and respect to others property. Else, knowing our mentality and the law finding houses for rent by people not willing to pay advance will be impossible.
	() Thanks

14th March 2017, 16:29	#63
theMandarin BHPian Join Date: Jan 2016 Location: Vormir Posts: 93 Thanked: 349 Times	Re: Team-BHPian takes on extortionate Bangalore landlords with a PIL I think the underlying question in this debate is that how can this practice of a 10 Months’ rent be justified for Bangalore while the risks/benefits with this endeavor are no different than if the property was in Mumbai/Delhi or any of the Tier 1 cities. I am living in a rented PG accommodation in Gurgaon which is a very lucrative business here. Buildings are designed specifically for renting and then let out to caretakers for a fixed monthly cost for the entire building. The caretaker is then responsible for renting out individual rooms/floors and deciding his profit margins. The reason I’m saying this is that since the primary objective is renting out, the furnishing is just the bare minimum standard expected based on the rent demanded. So the room has a cheap CRT TV, simple bed and so expensive furniture. This will change to say a LCD TV as the rent goes up but the owner/caretaker has carefully identified the amount of risk that he is willing to take and therefore does not need to question too much on the type of tenants. The advance asked in of 1 month rent. If this was an individual property say a flat/house given for rent, the owner would definitely follow a vetting process to ensure his risk is minimized. I have practically seen this happen where a property is rented to PSU bank employees since it is almost guaranteed that a transfer will happen in 3 years and their rental income is assured directly from the bank. The advance I have seen is 2 months rent. From my limited experience, I have seen that owners have repainted the property out of their own pocket albeit by doing the bare minimum in terms of quality to keeps costs/risks in check. In both of these cases, the property owner has determined the amount of risk involved and the rent will reflect that. Bangalore will have the same challenges then how is a 10 month advance justified? I say justified because, technically I cannot demand a fair price as it will vary from person to person based on their expenses. I am in the early stages of my career and I just cannot afford coughing up 10 months of advance rent. I might have to ask for funds from my family but then that won’t be an option for everyone. Even my employer offers 2 months of salary advance specifically for this purpose. So the question is whether these high rent advances are justified considering that all risks are constant everywhere.
	() Thanks

15th March 2017, 14:28	#66
Guite BHPian Join Date: Jul 2008 Location: NCR Posts: 738 Thanked: 649 Times	Re: Team-BHPian takes on extortionate Bangalore landlords with a PIL 10 months rent as security deposit is a lot of liquid cash blocked away. Moreover there is also fear that landlord may not return the amount speedily at the end of tenure. I am just wondering whether bank guarantee will work in this kind of case. Or will it complicate the matter more. Of course a bigger question is whether banks will want to get involved.
	() Thanks

15th March 2017, 14:34	#67
noopster Distinguished - BHPian Join Date: Feb 2010 Location: Pune Posts: 9,269 Thanked: 13,247 Times View My Garage	Re: Team-BHPian takes on extortionate Bangalore landlords with a PIL Actually 5-6 months as deposit is not uncommon. As a former Bangalore landlord, that's what I took from my last tenant. But by then he'd already been our tenant for a year and we revised the terms during renewal. His payment track record held him in good stead as did the fact that the home was very well maintained. 10 months is extortionate but the problem in proactively offering to reduce it is that prospective tenants automatically assume you are hiding something. Since a number of tenants either split the deposit (when renting to singles) or get it paid through company (in case of CLA), the temptation to charge the full 10 months deposit for a landlord is high. As such the PIL is well-intentioned but it takes more than legislation to change mindsets.
	() Thanks