Almost two years ago, Suneel Padale, 36, a development professional, moved to Delhi from Bharuch, Gujarat, on an assignment. Initially, he stayed with friends and acted quickly on their suggestion to look for a house in Mayur Vihar Phase-I. He visited the area and liked it. With friends and newspapers disgorging details of property agents in the area, the house search started.
Suneel Padale, 36, Development professional, Delhi
He was, however, disappointed with the results as most of the apartments he checked did not live up to his needs. He stuck with the location in spite of that. Finally, he moved into an apartment that he liked—but it turned out to be a sour deal. As Padale says, “The landlord wanted to sell his house and in the intervening period he wanted to get some rent.” For Padale, the search began again.
This time, however, he changed his strategy. During his stay he had made some new friends, particularly, older residents of the area. He took references of property agents from them. “These agents had a larger supply of flats as compared to the earlier ones,” says Padale. Still, it was two months before he found a flat. He summed it up wryly: “The experience is quite painful and time-consuming.”
The demand
Painful, indeed, is the process, especially if you are searching for a house in the April-June period as a lot of job openings are created then. Also, campus placements of most business schools usually end around that period. “This adds to the demand for rental properties; primarily, this demand is created in the Rs5,000-15,000 bracket,” says Prashan Agarwal, business head, www.allcheckdeals.com, India’s first online brokerage for residential real estate.
The effect
It is now established that the sale of ready-to-move-in properties has taken a beating. The main reason is the high cost of real estate, with credit becoming costly. As an outcome, many people are effectively postponing buying their dream home. This has driven up the demand for properties on rent. “In the last 6-12 months, rentals have risen, on an average by 15-20%,” says Agarwal.
For rents to stabilize or fall, volume of property purchase transactions needs to move up. With that not happening, at least in the short term, rentals will continue to move up. Against this backdrop, if you are rent-bent, you need to look at a few things.
The location
The first step is to zero in on the locality. Then find out the regularity of water and electricity supply. Check the distance to your office, local markets and other amenities, such as schools and hospitals.
Also, go through the property portals to get an idea of the fair rent for that locality.
The agent
Get in touch with property agents. You could also sound out your office colleagues, in case they are planning to rent out their property, or know someone who is willing to do so. This makes sense as by getting rid of the agent you save on brokers’ fee, which is typically a month’s rent.