Zero rentals a hit in Mumbai suburbs

Zero rentals for residential flats is fast gaining popularity in the extended suburbs of Vasai-Virar. But there’s a catch. Pay a heavy deposit, which is returned when the leave-and-licence agreement comes to an end — provided the house is returned to the owner in its original condition.

Owners are encouraging zero rentals in return for "heavy deposits" to the tune of Rs 2 to Rs 5 lakh so that they get back their flats in proper condition when the tenants leave.

A proper leave-and-licence agreement is drawn up and both the owner and the tenant do not need to contact each other until the agreement ends.

"Each time a tenant vacates (a flat), we have to spend a bomb on repairs. New tenants always insist on basic maintenance of the house. At times, the electricity bills are also kept pending. A deposit of mere Rs 25,000 to Rs 50,000 does no good," said Ashok Shelat, a Vasai resident who rented out his apartment for a deposit of Rs 3 lakh.

People looking for accommodation are increasingly getting attracted to the zero rent scheme. A jeweller in Nala Sopara paid Rs 1.5 lakh as deposit for a 1-bedroom-hall apartment. The jeweller will occupy the flat and use the furniture for a period of 11 months, after which the cash will be returned.

Says the jeweller, "I had the cash. By doing so, I saved the headache of paying rent every month and I am also happy that when the agreement expires, I will get back my entire money."

Real estate agents say that while tenants find the zero rental scheme attractive, they also take good care of the flats to avoid deductions in the deposit amount. Flat owners also find it more lucrative to reinvest the lumpsum deposit than collect a monthly rent, which is usually spent immediately.

"Rentals in this area range from around Rs 2,000 to Rs 4,000 and the deposits are between Rs 25,000 and Rs 40,000. A big cash deposit is re-invested far more wisely," said Kishore Pandey, a Virar-based real estate broker.

Estate agents say owners, too, prefer taking the cash in advance and then forgetting about the tenants for a year. "In case of heavy deposits, the flat owner does not mind renting out the accommodation for more than a year to the same party," said Sridhar Shetty, a real estate broker from Vasai.

Tenants, especially newly-weds and those with transferable jobs, are opting for the zero rent schemes.

"As we got a flat along with furniture, we could not resist (the offer). Though the owner wanted Rs 2.5 lakh as deposit, the zero rental scheme was attractive. So, we put together our savings and made the agreement," said Mukul Ankleswar, who got an apartment on zero rental basis in Evershine Nagar, Vasai (W).

(via Times of India.)