Posted By Neha Yadav
Published May 29, 2024

Hindustan Times
Real Estate

Photo Credits: Unsplash

6 things tenants in Bengaluru must know about the zero deposit rentals scheme

Planning to move to Bengaluru to take up a new job?

If you’ve recently received a job offer in Bengaluru and are worried about the high rents and the security deposits that you may have to pay upfront to your landlord, the zero deposit rentals scheme may offer some relief.

What is the zero deposit rental scheme?

Under the zero deposit rental scheme, tenants in Bengaluru pay an upfront annual premium, typically around 6% of the probable deposit or bond value. Additionally, tenants pay a premium of up to 10% on rent for access to zero deposit properties.

How does the zero deposit rental scheme work?

Under the scheme, the prospective tenant signs up a tripartite rental bond with the landlord and the third party executing it for a nominal one-time fee. 

The rental bond serves as a guarantee in favor of landlords, providing financial security in the event of tenant default, covering unpaid rent, utility bills, breach of lock-in periods, and property damages.

The need for a zero deposit rental scheme in Bengaluru

Almost 40% of a person’s salary in Bengaluru is spent on rent. There have also been instances of people enquiring if they can avail of a personal loan to pay for high rental security deposits. 

In case of rental bond, the tenant pays only about 6% of the amount that he would have otherwise paid upfront as security deposit.

For how long is the rental bond valid?

The rental bond is valid for six months to 11 months, depending on the tenure of the lease agreement. It has to be renewed every year.

Rental bonds are a popular instrument in global markets

Rental bonds are also popular in global markets such as Brazil. A start-up focused on rental properties, QuintoAndar, had launched a similar product in the country. The business model was based on connecting those looking for an apartment with those renting out properties.