Individuals choose to rent a house rather than buying one for many reasons. For instance, someone who is just starting out on his career may prefer to rent a house until he or she can afford to buy a house. Banks also look at a person’s income when they evaluate home loan applications. This means that unless you are well established in your career, you will not be able to get a sizeable home loan. Many people also do not want to be tied down to a city, just because they own a house there. They’d rather be free to travel and explore different job opportunities all over the country. Due to these reasons, renting is a very popular practice in major Indian metros. In this article we look at the financial capital of India - Mumbai - from the point of view of someone looking to rent a house there. How does one find an affordable place and how does one cut down on their rental cost?
Rental Prices Vary Significantly by Neighbourhood
While the general trend shows that rental rates are on the rise, with a bit of planning and awareness, renters can get affordable houses in Mumbai.
Mumbai sees a significant and often drastic variation in rent from one locality to the next. For instance, the average monthly rent for a 2 Bedrooms, 1 Hall and 1 Kitchen (2 BHK) apartment in Andheri is Rs 40,000. Whereas an apartment of the same size would only cost you about Rs 15,000 in Mira Road East. It is important to also keep in mind that the average price for a 2 BHK apartment in most localities starts from Rs 20,000 per month. Looking at the major administrative regions of Mumbai, we see that Thane, Mira Road and localities beyond Thane are the most affordable.
However, these are also far from the major business districts of the city and hence will add significantly to a renter’s commuting time and cost. With these factors in mind, we have identified Mira Road East, Dahisar East, Bhayandar East, Khargar and Bhayandarpada as the most affordable localities. Mira Road East and Bhayander East fall under the Mira Road administrative region, Dahisar East belongs to the Andheri - Dahisar sector, Bhayandarpada falls under the Thane region and Khargar is a part of the Navi Mumbai region. These localities have average rents in the range of Rs. 20,000 to Rs. 28,000 for 3BHK flats, Rs. 12,000 to Rs. 20,000 for 2BHK flats, and Rs. 8,000 to Rs. 15,000 for 1BHK flats. In contrast, the average rent in some of the more expensive areas can go as high as Rs. 88,000 for 3BHK flats, Rs. 72,000 for 2BHK flats and Rs. 40,000 for 1BHK flats.
How Have Rental Prices Changed From Q2-2018 to Q2-2019?
Renters should also check how the prices for different localities have changed over time. During our research, we found that rent rates in Mumbai change quite rapidly.
|Mumbai Beyond Thane||6.8%||-10.0%||6.1%|
|Mira Road And Beyond||-7.9%||15.6%||6.1%|
|Mumbai South West||7.2%||0.5%||-5.9%|
|Central Mumbai suburbs||-4.4%||1.5%||5.4%|
For instance, the average rent for a 2BHK flat rose by 15.5 % in Mira Road region from Q2 2018 to Q2 2019. In contrast, during the same time period, rent rates in Mumbai Harbour have actually dropped by -3.249 %. So how does knowing a rent change trend help a renter? This is another area where knowledge of rental trends can help you from being overcharged. One common tactic of real estate agents is to claim that “rent rates are on the upswing all over the city.” However, our analysis suggests that’s really not the case. Trends keep changing from one year to the next and even from one quarter to the next. Knowing the trends for a particular locality will help you to negotiate from a position of strength with your landlord or your real estate broker.
How to Save Even More on Your Rental Flat
Let’s face it, rent is often the biggest monthly expense for many individuals and families. We’ve come up with a few simple methods to help out renters so that they can save a bit on their rent.
Don't Hesitate to Negotiate
In Mumbai, new renters often avail the services of a real estate agent to rent a new place. They usually charge one or two months rent as their brokerage - if you choose to rent one of the places that they show you. Guess who wins if the rent is too high? That’s right. Both the house owner and the real estate agent stand to gain by overcharging the new renters. One common method by which a new renter is overcharged is, by telling him that the rent that he is being quoted is “standard rate” for that locality. Don’t fall for this trick. If you go with sufficient preparation, your real estate broker will not be able to pull this trick on you.
Even if it is a new and uncomfortable experience, renters should definitely negotiate for a lower rent. Even if you are able to get your rent down from the asking price of say Rs 20,000 to Rs 18,000, that works out to a saving of Rs 24,000 annually. This can be useful for your other expenses or savings. Another area where you can save is with your real estate agent brokerage. While one or two months rent is considered “standard” rate in Mumbai, one need not take it without any negotiation. Renters should definitely negotiate for a lower brokerage.
Limit Utility and Maintenance Expenses
Utility costs are another area where you can make some savings. Most apartments in Mumbai will have their separate meters which track your electricity, water and piped cooking gas and generate the bill every month. You will have to be smart about efficiently utilizing these services. For instance, you can cut down on your electricity bill by purchasing efficient appliances and going for LED lighting instead of conventional fluorescent lamps. And if you can convince your landlord to make some of these changes, it is like having your cake and eating it too. In many apartments in Mumbai, landlords will charge you a maintenance fee. This fee goes towards maintaining the facilities like elevators, security guards, CCTV cameras and so on. You can negotiate lower prices for maintenance charges if you are not using certain facilities. For instance, if you don’t own a car, you can ask your landlord to not charge you for the parking slot.
Consider Renting a Single Room
Renting a single room is a great option for folks who are new to the city or just starting out on their careers. This way, renters can save money on the rent and then go for a larger flat some time down the line. Again, depending on the locality, the price of a single room can vary a lot. As per the popular real estate site Nestaway, in Mira Road East it would be in the range of Rs. 5,000 to Rs. 9,000. On the other hand in Andheri, it varies between Rs. 15,000 to Rs. 25,000. Please ensure that you have a very clear, notarized rental agreement with your landlord before you rent a room. Also, try to meet your future roommates and clearly workout how you will be managing the utilities and rent payments. Talking it out in advance will save a ton of hassle later.