Nestaway struggles to refund tenants as thousands vacate due to covid outbreak

Nestaway Technologies, which provides homes on rent, is struggling to refund security deposits to the tenants, even after they vacated the premises and returned to their hometowns amid coronavirus outbreak.

Some of occupants have also moved consumer courts alleging fraud and extortion against the Bengaluru-based startup due to non-payment of their refundable security deposit.

At least six tenants that Mint spoke with said that the company failed to refund their money several weeks after vacating the premises. The occupants also alleged that in many cases, the company imposed hidden charges recovering the entire security deposit.

Most of the tenants who have not received the refund have now taken to social media and organized themselves on messaging apps like Telegram.

Sourabh Choudhary, a Nestaway tenant based in Mumbai said that he is yet to receive a deposit refund worth ₹75,000 for his twin-sharing room that he vacated in March. Choudhary’s monthly rent was ₹25,000 and he paid three month’s rent in security deposit when he moved to a Nestaway property in August 2019.

“On 24 March I left the property and gave my notice period which is 15 days, however, Nestaway had already disabled the option to move-out in the mobile app hence I left an email and informed customer care,” Choudhary said.

He added that although he vacated the premises back in March, Nestaway failed to acknowledge it and sent invoices for rent payments for the months of May and June. In addition, Nestaway also imposed additional “utility charges” for May and June and even charged Choudhary ₹2,500 in late fees despite vacating the premises in March.

Siddhant Garg, a Bengaluru-based software engineer based said that Nestaway deleted his dashboard and past history of grievances as soon as he vacated the premises in June.

“I moved into a Nestaway property in February, 2019. I decided to vacate the house this June after the lockdown was lifted. After I raised a request to vacate on the app, it mentioned that I would be paid back deposit refunds of ₹25,000 without deductions within 7 days, but this entire information was deleted from the dashboard the day after I moved out and I’m yet to receive any money,” Garg said.

A Nestaway spokesperson said that the startup has seen a “surge in move-out cases” in the last 3-4 months. To date, the startup claims to have solved around 3,000 move-out cases where the security deposit was pending.

The company added that there have been many instances of property damage found in inspections carried out by a third party and that it only charges tenants for the damage caused. There were also a few instances when tenants claimed to have moved-out but were found to be still staying in the property, the spokeswoman said.

"Note that for over 95% of our tenants who have moved out before June, the refund has been processed. Few cases have been pending because if the area is in a containment zone and we are not allowed to go to inspect the properties or simply because landlords have refused to do so," the spokesperson said.

Co-founded by Amerandra Sahu, Deepak Dhar, Jagadev and Smruti Parida in 2015, Nestaway provides managed rentals in two formats which include shared living spaces in apartments and villas as full houses ranging from 1BHKs to 4BHKs. Shared spaces are targeted mostly at bachelors and students while the full house format is meant for families.

Nestaway has so far raised around $110 million from investors such as Tiger Global, Epiq Capital, Goldman Sachs, and Chiratae Ventures. It currently claims to service over 70,000 tenants and over 40,000 property owners in 15 cities.

The covid-19 has put a halt on expansion plans of co-living startups forcing them to go into damage control mode. In the last three months, co-living startups have seen a drastic drop in demand and physical occupancy in co-living facilities across cities, as students and young working professionals returned home during the lockdown.