A city of To-lets

Bangalore Capstone COVID-19

Owners and tenants suffer due to covid -19 lockdown in the state while rental websites make a profit via advertisements with the increase in listings on their websites.

Bangalore: Prabhakaran Rao, whose livelihood entirely depends upon the house rents he receives is worried as more than 70 percent of his properties which he gives for rent are vacant even after the first wave of the pandemic. Prabhakaran has six apartments in Bangalore a few 2-bedroom apartments and a few 3-bedroom apartments and 11 studio apartments all in Bommanahalli. He said that all the 11 studio apartments now are vacant. During the time of the covid first wave, five out of his six- 2- and 3-bedroom apartments were vacant. This is very unusual in a city like Bangalore, a city also known for its IT hub.

The IT industry draws many customers to the rental business as people from all over the country come to live in Bangalore for job purpose. However, Covid -19 has facilitated work from home option. In addition to that, schools also remain shut leading many families to go back to their hometowns affecting the housing sector.

As the demand has fallen the rents of the houses also declined. According to the renting platform Quirk analyses, usually, the average rent of a 1-bedroom apartment as of June 2020 is Rs. 6,900 which has fallen from the actual rent of Rs. 8,000 in May 2020. The rents of 2-bedroom apartments have also fallen to Rs. 31,000 in June 2020 from an average of Rs.48,000 in May 2020. 

Prabhakaran said that never in his life he had to face a situation like has been facing now, his apartments always were occupied. To attract tenants, when the old tenants left, he renovated the house and made it look attractive, even then for a long time he did not get any tenants. “From March, when the lockdown was imposed, to April this year, I did not receive any rents apart from the rent I used to receive from that one apartment.” He reduced the rent to 50 percent, but still, tenants were not willing to stay as they were working from home and to save money, they migrated to their hometowns. 

To-Let boards all around the city| Credit: Author

Not just Prabhakaran, but they are thousands of house owners who were affected during the time of the first-wave lockdown. Another such is Rajesh Manjunath. He owns a provision store in Bangalore and was badly affected at the time of lockdown. As lockdown was imposed in Karnataka for a while his shop which is the major source of income was shut. A secondary source of survival for Rajesh and his family is the rent they receive from a two-bedroom apartment that Rajesh owns. He said, “I have rented my house to a couple, who are software engineers they vacated the house and went to their native village as they had work from home option. For almost eight months the house was vacant”. Rajesh said that they had used all the savings as their source of income was affected. Although his shop is doing well now and he found new tenants Rajesh said that he never expected that he will have to live such terrifying days in his life.

report by Bengaluru Residential Market Update (2020) shows a decline of 20 percent demand for rented houses in the city. The report also said that as the demand for residential accommodation is increasing in the outskirts, the demand for house renting is to decline by 15-18 percent, on a year-on-year basis. The reports list’s places like Whitefield, Marathahalli, Rajajinagar, Yelahanka, Thanisandra, Kudugodi and Bellandur among the affected regions and Hebbal in North Bengaluru as the worst affected area.  

Prabhakaran said that the condition has gotten better. Although only four of his apartments have tenants now and still there are two apartments and 11 studio houses vacant, he says it’s better than nothing. However, he complains saying, “The tenants who are coming to see the houses are taking advantage of the situation, now they have so many options available in the market and hence they are trying to negotiate the price.” He said that the apartment he has in J.P.Nagar is a two-bedroom apartment worth Rs. 17,000 but the tenants are asking it for Rs.10,000. He says he is left with not much of a choice.

Property owners who want a fair deal are even calling for reduced rents. It has become challenging for the owners to find new tenants. Moreover, many landlords who took hefty loans to construct homes are struggling as they are dependent on the house rents for their survivals and for paying their house loans.

Prabhakaran Rao has two children and his income completely depends on the rents he receives, “Imagine my situation during the time of the first-wave lockdown, we used to live with the rent that we receive from that one apartment.” He also said that he has a commercial shop which he has given for rent and the shop owner stopped paying the rent properly from March 2020 until now saying that the business is low due to Covid-19. Prabhakaran has reduced the rent from Rs. 78,000 to Rs. 50,000 but still, the tenant did not pay. “I am scared to take any legal action as that will cause another trouble.” The commercial shop tenant also told Prabhakaran “go and file a case against me, I don’t care”. He said that his EMI’s have been piled up and he needs to clear them as he built the houses by taking loans from banks. Adding to his trouble he is now advertising his houses on rental websites which he never did before, he said this is an additional expense to him. 

It has become a common practice in Bangalore for the owners to give their houses for rent and stay in a better-gated community. However, the lockdown has forced such owners to move to their houses vacating their stay in gated communities. One such owner who was forced to move to his own house is Chaitanya Kumar.

Chaitanya Kumar owns a two-bedroom apartment, he said that his tenants left the house in June as they had work from home option. Explaining the condition, he said, “when the lockdown was initially imposed the conditions were fine. In April 2020 almost all the companies have asked their employees to work from home until the pandemic ends. In between May-June 2020, most of the tenants slowly left Bangalore and went to their hometowns. This is when the problems have begun. “Chaitanya rented his house to a couple who lived with a child. As the lockdown was imposed the couple got the option to work from home and the schools were also shut so they left Bangalore. “From June 2020 to January 2021 I waited for a new tenant, but none showed up.” With no option left Chaitanya and his family who used to live in a gated community paying Rs. 40,000 rent per month moved to their apartment. “I want my children to live in a peaceful environment so we moved to a gated community two and a half years back. Now, I can’t pay Rs. 40,000 rent as there is a cut in my salary, and in adding to that no income from my apartment so I decided to move.

The demand for these rental houses is really low when it comes to mid-income housing and luxury housing, but the supply is high when it comes to these groups according to an online rental agency 99acers latest report. However, the demand for affordable housing remains high than the supply as people want to save money during the pandemic.

Source: Bangalore residential market update report by 99acers

Not just the owners but also the tenants were affected. As many lost their job they had to go back to their villages to escape paying high rents and other expenses. Also, the salary cuts in many industries affected the tenants. As per the online real estate platform Nobroker.com, Bengaluru has 2.9 million houses on rent, which includes apartment flats, small gated societies and standalone houses. According to an estimate, these properties generate about Rs 4,060 crore as rent every month.

EluruVedha Mani, who lives in a rented apartment of JP Nagar said, her owner not only did not reduce the rent but asked them to pay the usual 10 percent hike which starts every year in May. “Adding to the rent burden, we used to pay maintenance which is Rs. 3150 a month. My husband’s salary was reduced by less than 50 percent and my salary was also deducted due to the pandemic”. she added, “This is scary, two of my husband’s colleagues, who work in the same department with my husband were infected by Covid and their owner did not allow them to stay in his house.” Vedha Mani says that she was frightened that they may have to face the same situation as her husband was in close contact with the two colleagues, who tested positive for Covid. Luckily, her husband tested negative.

Remote work for adults and online classes for children which don’t require tenants to stay near the workplace or child’s school and job losses have tempted tenants to go to their hometowns or move to cheaper apartments or move outskirts into spacious, affordable houses.

Monalisa Chakravarthy said that she used to live in a three-bedroom apartment with two other flatmates. “The first flatmate vacated immediately after the first-wave lockdown, then the other flatmate and I used to pay the rent, later that second flatmate also left, I used to pay a total of Rs. 24,000 per month as my rent alone.” Adding to that she was also paying the building maintenance and other bills, which were earlier divided amongst the three. She said despite asking her owner to reduce her rent, he did not. Monalisa’s work demanded her to go to the office, unlike many other employees who have the option of work from home, which has forced her to stay in the city rather than going to her hometown. Now, she has managed to move to a smaller apartment as paying Rs. 24,000 every month is more than half of her salary. “I have paid the whole rent during the lockdown and used to live alone, understand my pain, owners should be a little generous I feel,” Monalisa added.

Owners are saying that tenants had more advantages during the time of lockdown. The rules and regulations introduced by the government were in favour of the tenants, but not in favour of the owners. The Ministry of Housing Affairs during the time of lockdown has said “Wherever workers, including migrants, are living in rented accommodation, the landlords of those properties shall not demand payment of rent for a period of one month. If any landlord is forcing labourers and students to vacate their premises, they will be liable for action under the Act.”

Factors that have been effecting the rental market | Credit: Author

With the rules that were bought in by the government, landlords did not even have the option to demand rents from tenants or force them to leave the house. The state’s Commissioner for Health and Family Welfare, Pankaj Pandey, in a tweet said, “Attention! Landlords and House Owners. Forcing the Labourers to vacate the house will lead to penal action against you. Help them when they need you the most!”

Bangalore Tenants Association member Vinay Venugpaol said, “Tenants suffered a lot, they were harassed by the owners for rents especially during the time of Covid-19.” He said in most cases owners do not pay back the tenants the deposit amount. Vinay said, he being a lawyer tries his best to solve tenant’s problems and guides them legally if necessary. 

The worst is that owners in Bangalore do not even have the power to form an association under the law. Although there is Karnataka Apartment Ownership Act, 1972 an act that came in to provide certain powers to the association and the owners in maintaining the apartments, the act has never been in force. Abhilash Naik, an advocate, recently filed a petition in the High Court of Karnataka asking the court to enforce the act.  

Abhilash Naik, a legal advisor to several apartment associations said, “When we go to the office to register as an association the authorities keep saying that the government hasn’t given them the power to register any association.” He says although the act was legal and has been approved by the government the implementation of the act wasn’t happening. “When the owners go to tenants to collect maintenance money to run the day-to-day activities of the apartment, they are in a state that they can’t demand if the tenants refuse to pay the money as the only act that gives power to the association is inactive.” He added, “There is no budget allocated for the act or there is no staff or a proper office set -up”.

Vikram Bhat, Architect and Urban Designer at Urban Synthesis, said, people from different parts of India, skilled and unskilled labourers come to Bangalore for their livelihood. “Especially, people to work in the IT (Information Technology) sector as Bangalore is the hub of IT sector.” He added that Bangalore has a good real estate market and the growth rate is increasing annually by 10 percent. Pandemic has hit the market hard due to which the market has been seeing many fluctuations.

“It should be a win-win situation for both the parties (owners and tenants) there should be a market balance if we have to survive the situation”. Vikram suggests that owners should negotiate with the tenants and follow a push and pull strategy “Owners should not charge rent for three months considering the pandemic and the tenants should be loyal to the owners as they are trying to help them.” He says that if the owners lower the prices completely then the real estate market falls, hence a balance should be maintained in a situation like this. Considering the second wave Vikram said “Hopefully, the lockdown in the state will not last long and the situation will get better now.” However, he says that the future is unpredictable and in the worst-case scenario people have to learn to deal with the situation and look for a better alternative.” 

The ones that are benefited from this are the rental agencies and rental websites which have been seeing a huge spike in the number of listings and have been receiving a lot of money from owners to advertise their houses and commissions. 

One such platform that has been benefiting is NoBroker.com. The platform on average gets more than five lakh tenants looking for a home on its platform every month and more than 25,000 people find houses too. Navith Kumar, a nobroker executive said “In the past, people were ready to compromise on space as long as their house was near to their office. Now, as they are working from home, they are looking for spacious houses outside the city. The listings have almost increased by two-fold since last year as many were leaving the city.” 

The latest Magicbricks owner service consumer study has showed that pandemic has induced landlords to even sell their homes due to their financial conditions. According to the study, in Bangalore, Whitefield has seen the greatest number of sellers online. Mohit Nigam, Areas Sales Manager of Magicbricks, said, “Like any other rental website even we have seen an increase in the listing of houses. The problem here is the listings are increasing but they are no tenants in the city. Bangalore rental business majorly depends on the migrants who come from outside the city who have now been decreased. Mostly, permanent residents of Bangalore prefer having their own house rather than having a rented one.” He also said that the job market and the rental business in Bangalore to an extent are interrelated and this has been one of the reasons that the owners are not receiving any tenants. 

In view to spur the overall growth of housing across the country, the Union government recently has approved the Model Tenancy Act for all states and Union Territories. The act will create adequate rental housing for all the income groups hence addressing the issue of homelessness in the county and will reduce the friction between property owners and tenants, a win-win for all.

Bangalore is well known as the hub of the IT sector. It is one of the top 10 preferred entrepreneurial locations in the world. People from all over the country come to Bangalore to work in the IT sector, if not to work in the IT sector to make a livelihood by working somewhere or the other in the city. According to recent data released by the office of Registrant General and Census Commissioner, 50.6 percent of people living in the city are migrants and these are growing in number. The increase in the number of migrants has kept the real estate business in Bangalore booming for a while now until Covid-19 has affected the industry. Now with the second wave in the country the market which was getting better after the first lockdown is seeing another lockdown and the conditions seem unpredictable. 


Leave a Reply

Your email address will not be published. Required fields are marked *