Richa Kulkarni, a chartered accountant, moved to Mumbai from Bengaluru seven years ago and has been paying about Rs 50,000 rent per month for a house in a gated community in Kandivali, which has all the amenities.
She recently shortlisted an under-construction property in the same area and paid the booking amount. She says that she consciously chose to stay on rent all these years as it was more cost effective and there were several rental options to choose from, as against making a capital investment where there would be strict budgetary constraints.
“If I had bought a house seven years ago, it would have cost me around Rs 2 crore and my EMI (equated monthly instalment) would have been Rs 1.5 lakh. My rent then was around Rs 40,000 per month. I have now decided to buy a house despite rising interest rates because I am more financially stable and have this emotional and aspirational factor to consider. Besides, loan eligibility is also a big factor. I may not easily get a loan as I grow old,” explains the 38-year old.
An apartment worth Rs 2 crore in a Mumbai suburb with a rental yield of about 1.5 percent per annum will cost Rs 3 lakh per year in rent. Even if a person decides to stay on rent in the same apartment for years, he may end up paying Rs 1.99 crore in 30 years instead of shelling out the total amount in one go.