Rs 1.26 trillion locked in as security deposit with property owners: Study

Rent, the NoBroker report said, is the single largest line item in most urban tenants' monthly budgets, and for nearly half of them it consumes more than 30 per cent of their monthly income

A staggering Rs 1.26 trillion has been locked away as security deposit with property owners across top 6 metros - Mumbai - MMR, Bengaluru, Delhi - NCR, Chennai, Hyderabad and Pune, suggests a recent study by NoBroker – an Indian proptech company and real estate platform that allows users to buy, sell, or rent properties.

 

Mumbai with Rs 41,156 crore and Bengaluru (Rs 31,628 crore) has the most amount of money locked in a security deposit amongst the cities surveyed, the NoBroker study reveals.

 

75 per cent of Bangalore tenants say a high security deposit has, at some point, stopped them from moving into a home they liked, among the highest of any major metro, the report said. 

 

 

Meanwhile in Delhi-NCR, around 58 per cent of tenants got their last deposit back in full after the expiry of the lease, about 30 per cent saw deductions, and only around 12 per cent faced a significant dispute, the NoBroker report said. 

 

 

Biggest chunk

 

Rent, the report said, is the single largest line item in most urban tenants' monthly budgets, and for nearly half of them it consumes more than 30 per cent of their monthly income. The weight of that burden, however, is distributed very unevenly across cities.

 

In Mumbai, 25 per cent of tenants spend more than half their income on rent, with another 15 per cent in the 41–50 per cent band, meaning roughly four in ten Mumbai tenants direct over 40 per cent of their earnings toward housing.

 

A structural affordability gap is quietly also reshaping who rents and for how long. For an identical property, the equated monthly installment (EMI) on a thirty-year home loan now runs well above the monthly rent in every major city, and that gap has only widened since 2021. In Bangalore, the NoBroker report said, the EMI-to-rent ratio climbed from 2.07 to 2.38 now, in Hyderabad from 2.21 to 2.47, and in Mumbai from 2.03 to 2.19. 

 

As buying grows costlier relative to renting across nearly every metro, a large cohort of aspiring homeowners, the findings suggest, is being locked into prolonged tenancy, not by preference but by arithmetic.   The home loan that once represented a natural graduation from renting, it said, now demands a monthly outflow these tenants cannot justify, and so they stay where they are. The forced tenant is no longer an exception in the urban rental market; they are becoming its centre of gravity.

 

Tenant behaviour

 

Tenant behavior, too, is changing as fast as tenant demographics, the NoBroker report said. Gen Z tenants switch homes roughly 1.5 times more often than older cohorts, compressing the rental cycle in a way that landlords are still adjusting to. 

 

Among tenants aged 18–24, 30 per cent move every six to twelve months, against around 10 per cent of those aged 35 and above. As tenants get older, stability returns: the majority of those over 55 stay put for more than three years at a stretch. 

 

 

Small is big

 

Investor economics in the rental market are tilting decisively toward compact formats. 1BHKs and studios, the report suggests, deliver higher rental yields than larger configurations in every city measured. 

 

Bengaluru at 4.8 per cent and Hyderabad at 4.6 per cent are among the top cities where rental yields are the maximum, while the yield curve falls steadily as unit size grows, dropping below 3 per cent for most 4BHKs, the report said.