I, like many others, loathe at the fact that the landlords in
Bangalore seek a deposit of 10 months for renting their flats out. I
mean, in many town and prominent cities across India, the deposit is
quite low, equal to or less than 3 months. So, I used to think 10 month
deposit is wrong and should be termed illegal. It seems I am wrong.
There are two reasons why I am probably wrong. Morally, and legally.
Morally, Why I am wrong.
A
flat is a property of the landlord. He/She is the owner and it is
absolutely his/her wish whether or not to rent it out. The valuation of
the flat, and as a result the rent, is also subjective and depends upon
the landlord. If he/she decides to ask for a advance deposit of 10
months, he/she is absolutely in his/her rights to do that and I cannot
deny or complain about that. I cannot also argue that the deposits in
XYZ and PQRST towns are only 3 months, so it should be the same at ABC
or RST towns. No two towns are same nor are the real-estate price and
factors. If I pay only Rs. 500 to acquire a square feet of land in a
small town, I cannot argue that I will pay the same amount to acquire
the same amount of land in Mumbai. If I do that, I won't be wrong and
nobody will put me in jail, but nobody also will sell me his land. So,
morally I am wrong in saying that the landlord's seeking 10 months
advance is wrong. It's his/her house, his/her valuation and he/she needs
the security amount. If I want to rent, I need to pay.
Legally, why I may be wrong.
To
rent/lease out flats, there are two kinds of agreements. One is a
rental agreement and another is a lease agreement. a rental agreement is
a month-by-month agreement which needs to be renewed after every month.
A lease agreement is of a longer-term, usually 11 months or longer. It
is renewed after each term. The rental agreements that we enter into
with our landlord are not exactly rental agreements. They are lease
agreements as words like lease, lessee and lessor appear frequently in
it. Lease agreements usually have a high advance deposit amount, usually
of 1 year rent-value or more and a lesser monthly rent. Hence, the fact
that we are signing that agreement - which we have to and which we
should, for our benefit only - gives the landlord right to demand high
advance deposits - which is called the lease deposit, not the rental
deposit - from us. Hence, legally, it is not wrong to ask for a lease
deposit of 10 months or more.
Conclusion
It's
all a matter of valuation of the flat as per the landlord. If he/she
thinks the flat is valued at Rs. 20,000 per month, he/she can ask us to
pay Rs. 15,000 per month and a lease deposit of Rs. 2,00,000, which
he/she can make a fixed deposit in bank and earn annual interest of ~Rs.
20,000 or he/she can either ask us to pay no deposit but higher rent of
Rs. 21,000-22,000 per month. The choice solely lies on him/her, and
after he/she had made the choice, its our turn to make the choice
whether to accept the terms or not. What we can do on our part is, if we
are paying a high advance amount, for example, of 10 months, we should
insist on a lease (rental) agreement to be made, which I don't think the
landlord will have any problems with.
And regarding landlords of
other towns who take lesser deposits, well, its their choice and their
loss. And it's not only bangalore where you have to endure this. Try
renting a flat in a upmarket locality of Mumbai, they seek advances upto
rs. 25 to 30 lakhs for a Rs. 30-40,000 flat!!
I know it hurts to pay such a huge amount, but it seems legal!
(Note: It's just my point of view which may be right or wrong. Discussions will surely refine and enhance our knowledge)
