A zero-deposit rental bond reduces the cost of moving into a rental space and offers greater financial freedom
Now it will be possible to rent a room without any security deposit as Eqaro Guarantees has introduced rental bonds, a first of its kind initiative in the Indian market. The bonds are launched only in Bengaluru as of now in partnership with FF21, a co-living spaces company with eight properties in the city.
The rental bonds would enable FF21 to offer ‘Zero Deposit Rooms’ to working professionals with rental bonds issued on behalf of the tenant favouring the landlord. In case of a default by the tenant, the bond would cover unpaid rent, utility bills, or any other damage incurred to the property.
Eqaro Guarantees said in a statement that it will issue a customized rental bond on behalf of FF21’s clients, covering 90 days lock-in period and any unpaid rent during the tenure of the bond. The tenants would have to pay a “nominal fee” for availing the service.
As per a Knight Frank India report, ‘Institutionalising the Rental Housing Market in India -2019’, nearly 11.09 million out of the 21.72 million residential units in urban India are lying vacant mainly due to low rental yield, unfavourable rules and laws, and the trust deficit between landlords and tenants. The recent approval of the Model Tenancy Act will stimulate rental activities across the countries.
India’s residential rental market is worth more than $20 billion, and the Rental Bond opportunity is estimated to be around $5-6 billion and expected to grow in tandem with the Rental market going forward.
Pankaj Bhansali, COO of Eqaro Guarantees, said one of the biggest challenges while renting out a property is the unavailability of the security deposit amount, and irregular payment of rent by the tenants.
“Rental bonds will help bridge the trust deficit between the landlords and the tenants. It will enhance the ease of doing business of renting out properties in India,” he added.
Ajay Nemani, Founder and CEO, FF21, said, “Since we cater largely to the young working professionals who are typically at the start of their careers, a zero-deposit and ready to move-in space acts as a great option as it reduces the cost of moving into a rental space and offers a higher level of financial freedom. At the same time, our interests as operators are also safeguarded through the rental guarantee.”