Growing up, Indian parents have always encouraged their children to pursue higher studies for a thriving career ahead.
In a strange turn of events, the fallout of succeeding or failing at this effort is playing out for prospective tenants in Bengaluru.
After having increased rents by up to 50 percent in the recent past, landlords in Bengaluru are now letting out their properties on rent only to select tenants who have strong academic backgrounds, and well-paying jobs.
"Kids, make sure you study well or you won’t get an apartment for rent in Bangalore in the future," tweeted Amit Gupta, an entrepreneur.
Amarendra Sahu, Co-founder and CEO of Nestaway Technologies, said that those with degrees from prestigious institutions are more likely to have higher-paying jobs, resulting in higher income levels, and consequently stand a better chance to get an apartment/house of their choice on rent.
"Landlords believe that such tenants are better off financially and can pay higher rents. This perception is not entirely incorrect, as graduates from prestigious institutions typically enjoy better career prospects and are more likely to hold higher-paying jobs," he added.
Competition in the rental sector
Shubh, who goes by one name, said, "Marks don't decide your future, but it definitely decides whether or not you get a flat on rent in Bengaluru."
Recently, his cousin, Yogesh, was denied an apartment on rent in Bengaluru, because his Class 12 marks were less than 90 percent.
According to conversation screenshots shared by Shubh, the broker had asked for his cousin's LinkedIn and Twitter handles, as well as Class 10 and Class 12 mark sheets, including an essay about the tenant.
In another instance, Rahul Arora, an entrepreneur, said, "I just realised, despite being the CEO of an award-winning start-up at 22 and one of the student ambassadors of my college, I would still not get an apartment for rent in Bangalore because I scored 79 percent in Class 12.”
Kiran Kumar from Hanu Reddy Realty said that with prices going up across the real estate sector, owners have their own financial commitments. "Today, they want to rent it out to those with stable regular income, especially government employees, bankers and employees at managerial levels. The better educational qualifications ensure that the tenant will be able to stay for a longer period of time, thus adding to the value of rentals," he added.
Kalvi Karasi from Dreams Realty agreed that the screening process for prospective tenants is more stringent today. "Many people are reported to be struggling to find an apartment due to this reason," she said.
According to Ritesh Mehta, Senior Director and Head of West and North, Residential Services and Developer Initiatives at Jones Lang LaSalle, currently, the residential rental sector is more landlord-driven. "The filtering process has become stringent, especially at a time when the demand and supply of fresh inventories are highly mismatched, and the landlords are in a position to pick and choose the best tenants."
After three waves of COVID-19, rentals for housing units have hit the roof in Bengaluru as demand has risen and supply continues to remain low.
For mid-segment apartments, Mehta added that today landlords are not only screening prospective tenants for their job profile but also looking at their history, for instance, the length of stay at the previous place.
Landlords have many options now. They can be choosy and select tenants who are more likely to stay for an extended period of time and take good care of the property, Sahu said.
A landlord in Bengaluru, on condition of anonymity, said for a rental of Rs 30,000, the painting and repair charges after the tenant leaves work out to about Rs 20,000 for a 2 BHK. "Even after the deduction of painting charges from the previous tenant, it becomes difficult for us to renovate the house constantly. Hence, we look for tenants who can stay for a prolonged period," he added.
Luxury housing, bachelors take a hit
Kumar is currently renting out a luxury apartment for Rs 1.5 lakh per month in Bengaluru's posh Sadhashiva Nagar area. "The owner clearly mentioned that the tenant should only come from the corporate sector and not from the start-up sector," he added.
And Karasi, who is renting out another luxury apartment in east Bengaluru's IT corridor of Whitefield, said the owner is asking for a rent of Rs 75,000 per month from families, while for bachelors, it is Rs 85,000 in addition to maintenance. "Apart from maintenance of the house, landlords think bachelors will be staying for a limited time while families can stay for longer," she said.
Mehta added that job layoffs continue due to the slowing down of the global markets and inflation-led recession. "Previously, landlords who were renting out luxury apartments (at above Rs 10 lakh per month) to expats, today have moved their choices to families with stable salaried jobs," he said.
In the luxury segment, Mehta said there has been about a 15 percent increase in cases where landlords reject tenants based on their background.
Additionally, brokers say that with an influx of employees into Bengaluru with work-from-office at the full boom, the turnover time for renting out a new apartment has gone down from one month to about one week.
Turnover time is the period within which a vacant apartment gets occupied again.
Mehta added that Bengaluru being more of an IT and financial services-driven market feels the heat more as the start-up sector faces a tough time. "They are also dependent on private equity, and the valuations which are stagnant today," he added. In such cases, the landlords are unsure of their paying capacity and sustenance during tough times, thus curtailing their prospects of becoming tenants.
Today, rentals across prime locations like Indiranagar and Whitefield, and IT corridors like Marathahalli and Bellandur in the south-east, Sarjapur in the east and Hebbal in the north, have jumped by 20-30 percent, and in some cases a whopping 50 percent.
Local brokers say that rents for a semi-furnished 2 BHK in Indiranagar can start anywhere at around Rs 40,000 and go up to Rs 60,000. For 3 BHKs, the monthly rentals can touch Rs 1 lakh.
Experts say that the rental frenzy will cool down in about two years from now when the residential sector receives sufficient and relevant supply. Till then, it’ll be a rough ride for tenants.
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