Home / Money / Personal Finance /  This Mumbai couple’s 860 sq ft flat is the biggest they’ve rented so far

Nitya Singh, 31, has been living in rented houses in Mumbai for seven years now. Her current 2-bhk, an 860 sq.ft apartment in Andheri East, is the biggest one she has occupied so far. Nitya moved into this apartment in April with her husband Nitin Singh Bundela soon after their wedding. “We landed a rather sweet deal and rented it for 40,000. This happened because of the pandemic as rents were lower as people working remotely had still not returned to the city. Post-pandemic, rents have surged and this very apartment now commands a monthly rent of 50,000-55,000," she said.

The apartment’s biggest draw was that it was newly-built and had a swanky kitchen. “It has a modular and very spacious kitchen. It’s hard to find such an apartment in Mumbai," she said. “Since the apartment was newly built, it looked pretty and clean. Setting up things in a new house is exciting and easier, compared to a house that has been used before," she said.

And to have got all this at the rent they are currently paying was a bonus, Nitya added. “I was paying the same rent for a 100 sq ft smaller flat in Andheri West. It had a beautiful view from the 13th floor, was closer to the metro and the locality was better, but I don’t mind trading all that for a new, cleaner and bigger apartment at such a reasonable rent."

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In the past, Nitya has rented 600 sq ft and 750 sq ft apartments for monthly rents of 40,000 and 45,000, respectively, in localities such as Andheri West and Versova. To put the expensive rental market of Mumbai in perspective, a 800-900 sq ft apartment in Delhi located in a similar neighbourhood would just cost 20,000-25,000.

Nitya has changed four apartments so far. “I prefer renting houses in areas close to my office and the metro. Commuting in Mumbai is very time-taking and taxing," said Nitya, a tech professional working in a finance company. In fact, both Nitya and Nitin give preference to the convenience of short-distance commutes and proximity to friends and family even if it means shelling out extra on rent. “I spend nearly 40% of my income on rent," said Nitin.

Prior to his marriage, Nitin too had rented houses in Bandra West and Khar, both upscale residential localities in Mumbai, to be closer to his workplace. “Both the apartments were quite expensive but I saved on my daily work commute and since all cafes, restaurants and party clubs are in these areas I did not have to travel anywhere else in the city."

Renting decisions in Mumbai boils down to picking between renting in suburbs, such as Borivali, Chembur, Malad, Mira Road, Vikhroli, and Kandivali, for lower rents or saving on commute by living in the city and paying higher rentals. 

On being asked whether they plan to buy a house in Mumbai, Nitya said remote work opportunities opened up by the pandemic has changed her perspective. “Nitin works remotely and I, being in the tech sector, can also get that option in the future. So, seeing how expensive real estate is in Mumbai, we’d rather invest that money in buying a house in a tier-2 city," she said.

Cost of renting

Security deposit in Mumbai is equivalent to 4-5 months’ of rent, which easily runs into six-digit as the average rent in Mumbai is quite high. The couple paid a security deposit of 1.5 lakh. 

Landlords deduct up to 5% of the security deposit towards repairs (wall fixtures, fittings) while the remaining money is returned on vacating the house, if there are no major damages. Though this is the general practice, it is advised that one checks their rental agreement for additional clauses.  Nitin had to forgo nearly 15,000 from his security deposit in 2013 towards home painting even though he had occupied the apartment for less than a year. “It was included in the agreement but I did not check it before moving in."

As for maintenance, regular repairs towards general wear and tear is borne by the tenant, whereas structural repairs are borne by the landlord. “My current apartment is new, so the landlord has agreed to pay for all repairs and fixtures for one year as you can’t anticipate how fixtures would turn out in a new apartment," said Nitya. 

Society maintenance charges in Mumbai are generally borne by the landlord. “I found this surprising because my sister in Bengaluru has to pay for it herself," said Nitya. However, this may not be the case with every landlord and should be discussed beforehand.

Nitya found this house through NoBroker. After having gone through brokers and online platforms in her search for the dream house, Nitya prefers the latter. “I find the process with brokers lengthy. You need to repeatedly explain your requirements in great detail and then visit each property they suggest. Online is just easier with all property details and pictures in one place," she said. Also, one gets to save on brokerage, which is equal to one month rent, going through these platforms. 

In Mumbai, tenants have to pay brokerage every year. So, avoiding a broker can save you on this additional annual cost. 

Nitin said your rent budget goes up if you are not paying the annual brokerage . “If you save 40,000-45,000 on broker’s fee annually, you can add that extra 3,000-4,000 to your monthly rent. This happened to me when I’d rented a house in Khar through Housing.com. I could afford to rent a more expensive apartment because of the additional savings on brokerage."

Leave and licence

Renting in Mumbai is bound by a leave and licence agreement. It follows the same format as that of a rent agreement–tenancy is fixed for 11 months that is to be renewed every year; it has details of rent and security deposit and terms and conditions on lock-in, if any, rent revision, notice period before vacating the property and maintenance costs are specified. But the key difference between a leave and licence agreement and a rent agreement is that the former has to be mandatorily registered. 

“In Maharashtra, it is mandatory for a leave and licence agreement to be registered, which may differ from that in states like Delhi where an 11-month agreement need not be registered. Leave and Licence Agreement is governed by Indian Easement Act, 1882," said Anshul Gupta, managing partner, ANG Partners Advocates & Solicitors.

In other states, the general practice is to get an 11-month notarized agreement on a stamp paper of minimum value of 50 or 100. This method costs about 1,500-2,500, whereas registering an agreement costs more. Since a Leave and License Agreement has to be registered, it is an additional cost that tenants in Mumbai have to bear. 

Gupta said the cost of employing a Leave and Licence Agreement can be divided into two parts–lawyer’s fees and the stamp duty. 

“A lawyer’s fee ranges between 3,000 and 7,000, which may or may not include the registration fees." The registration fee in Maharashtra is 1,000 for property located under municipal corporation and 500 for properties under rural area.

Stamp duty, governed by the Bombay Stamp Act 1958, is arrived at depending on the rent, duration, advance rent and security deposit. 

Gupta said: “The stamp duty is 0.25% of the total amount arrived through the following formulae: (monthly rent) * (no. of months) = x; advance rent paid, if any = y; and (10% of the refundable security deposit) * (no. of months for which the agreement is made) = z. Total sum (S) = x+y+z. Stamp duty is 0.25% of S." The registration can be done either by physically visiting the sub-registrar’s office or online on the website of the Department of Registration & Stamps. 

Nitya and Nitin registered their current agreement online through a rent agreement registration service platform called ezeeagreements, which charges a service fee of about 1,000.

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