There comes a time in every individual’s life when he/she has to move out of his hometown and relocate to a new city for professional reasons. The first order of business for individuals relocating to a new city is finding accommodation, which comes with its fair share of challenges. Apart from finding a lovely home, the most prominent of these challenges is the security deposit which tenants have to pay to their landlords before moving into the property.
What is a Security Deposit?
While renting a house, a Tenant has to pay a fixed amount of security deposit to the landlord, which is returned by the landlord once the contract expires, or the Tenant vacates the property. The deposit can range from 3 to 12 months of the monthly rental amount, depending on the terms of the Tenancy Agreement a city of domicile. It can be a substantial cash outflow because in Mumbai security deposit range between 9 to 12 months whereas in North India it could be anywhere between 3 to 6 months.
While the security deposit is part of the rental agreement, in the end, the onus of setting the amount lies with the landlord. The purpose of these security deposits is to protect the landlord in the event of a default by the Tenant, any breakage, or unpaid maintenance charges.
Common Problems faced by the Tenants
11.09 million houses remain vacant in urban areas. This is despite a massive housing shortage. Zero or no policy interventions for rental housing have been a significant deterrent for the creation of rental housing stock in the country.
Landlords take advantage of the high cost of living in metropolitan cities such as Mumbai, Delhi, Bangalore, etc. to push for higher security deposit amounts, with little regard to the condition of the house, as the ratio of potential tenants to rental properties is in favor of the landlords for prime locations. The upfront deposits become a deterrent to aspirational living spaces. Else if there is no other option, one seeks financial help from friends or relatives or take a personal loan to pay for the deposit amount.
After the Tenant has vacated the property, landlords often take their own time to return the security deposit. If the shift is between cities, then the Tenant is forced to forego the deposit.
Landlords’ Perspective: The Importance of Security Deposit
From a landlord’s perspective, the security deposit is essential for securing due performance by the Tenants, of his/her obligations under the tenancy agreement. The landlord, under the agreement, has a right to adjust the security deposit against any arrears of rents or other charges payable under the contract. Standard wear and tear of an apartment due to usage is usually not charged because he expects the Tenant will vacate the apartment in its original condition (refers to the house condition before the current tenant moved in) to the landlord.
The security deposit is a safeguard against rental defaults, damages to the property, and maintenance charges. Neither it is an assurance, of the creditworthiness of the Tenant in case of unpaid rent or maintenance charges.
The Solution – EQARO
Getting a rental bond is simple with Eqaro. The organisation recognises the need for the protection of the landlords’ and Tenants’ interests and provides landlords with a cover far superior to that of the traditional cash security deposit.
A rental bond acts as a replacement for the cash security deposit. It is a guarantee in favour of a landlord that the Tenant will fulfil his obligations under the tenancy agreement. It covers the following-
⪼ Unpaid rent
⪼ Up to 6 months of the lock-in period
⪼ Damage to the property
⪼ Unpaid bills – utility bills, maintenance charges, water bills, club charges, as set out in the lease agreement
The Tenants, on the other hand, can heaves a sigh of relief as with Eqaro Rental Contract Surety Bond, their money won’t stay tied up in security deposits. Upon payment of a fraction of the security deposit, Eqaro issues a rental bond guarantee to the landlord providing him with 100% protection.
⪼ Saves precious cash flow, sometimes to the extent of 8 to 10 months rentals
⪼ Avoids follow-ups with the landlord for the refund of the security deposit
⪼ Move from one property to another without the hassles of putting up an additional security deposit while waiting for the refund of the previous one
Eqaro Rental Bonds helps simplify the process of building trust between the landlord and the Tenant by taking the uncertainty out of renting.