'Always ensure that lease terms are clearly written in the agreement, including rent escalation clauses and notice periods.'
A viral post by a Bengaluru-based tech professional, who received a 7.5 per cent salary hike but faced a 10 per cent rent hike, resonated widely on social media.
Rents are climbing faster than salaries in several major cities. A recent Reuters poll of housing experts also indicated that both house prices and rentals are likely to outpace consumer inflation this year.
What's driving rents upward?
Rising property prices are having a spillover impact on rentals.
"The cost of property acquisition is increasing with rising house prices. This is leading to many deferring the decision to purchase property, and hence to an increased demand for rental homes," says Santhosh Kumar, vice-chairman, ANAROCK Group.
Post-pandemic construction delays amid pent-up demand have led to sharp price hikes over the past three years.
"As buying became less viable, renting emerged as the more viable option, leading to a spike in demand that has outpaced supply," says Prasun Kumar, chief marketing officer, Magicbricks.
Return-to-office mandates have put added pressure on rental markets, especially in tech and startup hubs like Bengaluru and Hyderabad.
The pandemic changed housing preferences, with a shift towards larger homes, gated communities, and better amenities.
"This shift has created a premium on quality housing, especially in the mid to high-tier segments. Hence, larger rent increases are being seen in this segment, compared to standalone houses," says Saurabh Garg, co-founder and chief business officer, NoBroker.
Supply, on the other hand, has lagged.
"Delays in new project deliveries, limited land availability in prime areas, and regulatory hurdles have constrained the addition of rental inventory," says Garg.
Moreover, the supply that is coming in is skewed.
"The majority of new supply is concentrated in the premium segment," says Sudhanshu Mishra, principal partner, Square Yards.
Rental housing is particularly scarce near business districts and easily commutable areas.
How can tenants cope?
Longer leases: Tenants confident of staying long term should opt for longer leases.
"This will lock you into a consistent rate of rental increase and prevent unforeseen increases," says Santhosh Kumar.
Garg recommends 24 to 36-month leases instead of the usual 11 months.
"A longer agreement provides predictability to the landlord and secures better terms for the tenant," he says.
Right location: Mishra advises looking beyond business hubs to emerging neighbourhoods. Garg suggests areas with improving infrastructure and connectivity.
"Use commute time calculators and check out access to public transport. Find a sweet spot between cost and convenience," he says.
Negotiate: Tenants should present rental data in comparable housing nearby. They should also highlight their strong payment history.
"If the landlord sees you as a reliable, long-term tenant, they may prefer a modest rent increase over the cost and hassle of finding someone new," says Garg.
Santhosh Kumar advises offering a few months of advance rent to negotiate better terms.
"Even if the rent remains the same, request for the inclusion of utilities, parking, or maintenance benefits to reduce the overall cost of renting," he says.
Other options: Mishra suggests sharing a unit with a roommate or downsizing to a smaller apartment.
Garg recommends using apps that offer price comparisons and zero brokerage.
Mistakes to avoid
Research market rates before committing. "Without knowing what similar properties cost, you could end up overpaying," says Mishra.
Avoid overstretching your budget. "Always ensure that lease terms are clearly written in the agreement, including rent escalation clauses and notice periods," adds Mishra.
Tenants should also avoid last-minute lease renewals, which can limit options and drive up costs.
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Feature Presentation: Aslam Hunani/Rediff.com
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