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A seismic shift is underway in Bangalore's rental landscape as zero deposit rental properties gain prominence, signaling a significant departure from the traditional practice of demanding exorbitant rental deposits. Against the backdrop of soaring rental deposits, which have surged by 20% this quarter alone in select localities, according to data from NoBroker, India's first proptech unicorn, zero deposit rentals are swiftly becoming the new norm.
The City of Gardens, notorious for its high deposit to rent ratio, is grappling with a rental affordability crisis, with premium properties commanding deposits as high as 30 lakhs for a 4BHK, making it increasingly challenging for tenants to secure housing. This trend has been particularly daunting for individuals who are relocating to Bangalore for career opportunities and are burdened by the steep increments in rental deposits. Gaurav, who's looking to shift to Bangalore for his new job, has been struggling with the huge increment in deposit he has to shell out for a rental property.
In response to this pressing need for more accessible housing solutions, zero deposit rental properties have emerged as a beacon of hope for tenants. These innovative rental bonds, which serve as a guarantee in favor of landlords, provide financial security in the event of tenant default, covering unpaid rent, utility bills, breach of lock-in periods, and property damages.
Under the zero-deposit model, tenants pay an upfront yearly premium, typically around 6% of the probable deposit or bond value, equivalent to the minimum return on investment. Additionally, tenants are willing to pay a premium of up to 10% on rent for access to zero deposit properties. This augmented rent, combined with faster rental turnovers and credit-verified tenants, serves as a compelling incentive for property owners.
We are witnessing a transformative trend in Bangalore's rental market, with zero deposit rental properties gaining momentum as a practical solution to the escalating rental deposits. The rental sector has been experiencing an inflation that is quite unusual and Bangalore tenants, already struggling with rental inflation are now having to deal with exorbitant deposits. Landlords in Bangalore ask anywhere between 4-10 months of rent as a deposit. Zero deposits as a solution takes care of the needs of landlords as well as tenants and we have seen a lot of them on board with the idea. We are committed to offering customer centric solutions that empower both tenants and landlords.
According to a recent survey conducted by NoBroker, 35% of tenants in Bangalore expressed their willingness to opt for zero deposit rentals. Presently, 5% of rental properties are being leased out through this innovative bond, a figure poised to surge as the market embraces this revolutionary trend. Notably, the zero-deposit rental segment has witnessed an astounding year-on-year growth of 400%, underscoring its increasing popularity among tenants and landlords alike.
Seamless claims processing and landlords' willingness to forego upfront lump-sum deposits will be instrumental in driving further adoption of zero deposit rental properties in Bangalore.
