This blog is a continuation of 8 Things You Need to Know Before Renting a Flat In Mumbai. These three additional topics will be an eye opener for you when renting a flat in Mumbai.

→ Annual Rental Escalation

This is pretty much what it sounds like. An increase on the base rent. They range from 5% to 10% per year. On lower rental prices escalation is usually upwards of 7.5% and in higher rentals they stay static at 5%. Annual rental escalation is there in mostly all agreements to factor inflation. It gets compounded. So say your monthly rent is ₹ 10,000, your annual escalation is 10% and your rent agreement is for 3 years. Then year one rent is ₹ 10,000, year two rent will be ₹ 11,000 and year three rent will be ₹ 12,100. Like everything else in Mumbai, escalation is also negotiable but very slightly.

Advance Rent

You would say, what do you mean advance rent? I always pay my rent at the beginning of the month anyways! What I am talking about is Annual Advance rent. This is a situation where you pay you entire rent for the year in one shot. Yes! You heard it right. We have people in Mumbai who do that REGULARLY.

Why you must ask?

Well, the discounts that you get in such situations are enormous. The property owner will be willing to reduce the rent dramatically in this situation. Imagine you REALLLY LOVE a home. The owner is asking rent of ₹ 50,000 per month i.e. ₹ 6 Lacs a year. Maybe you have budgeted only ₹ 4.50 Lacs as rent for the entire year and you have that money ready. There is absolutely NO HARM in offering the owner advance for the entire year. It is an advantage for the owner also. He is secured now for the year. He doesn’t have to worry about bounced cheques, late payments, cheque deposits every month. Maybe he needs money right away. You never know what is his internal situation.

Keep in mind. This doesn’t work all the time. Some landlords don’t care of advance rent. They want more money and are ok to get it monthly cheques. Always give it a try. If you save that extra money you can gift yourself a happy vacation. One important point to note in annual advance rent is the security deposit amount. Security deposit is usually nominal in such situation maybe just a month’s rent. It is to safeguard the property owner for basic account for pending bills or repair work that needs to be done when you leave the apartment.

→ Heavy Deposit Rentals

These are rentals where you pay a huge lump sum to the property owner to take their property on rent. In this case the owner will ask an EXORBITANT amount to rent out the flat.

Example: The Owner is asking ₹ 50 Lacs for renting out a 2 bhk flat for 2 years. You just pay ₹50 Lacs once and you are done. You don’t have to pay a single rupee rent for the 2 years.

Heavy deposit rentals sound enticing but there are some huge risks involved. In my experience most property owners who ask for this type of rental arrangement are usually in financial distress or are planning to live off the interest that they are going to get from the monies. I don’t recommend this as the risks involved are pretty high. What if the owner is unable to repay you the money when u vacate the flat? You are stuck in a flat that you don’t want to live in, you don’t own it, don’t have any desire to own it and on top of that you lost your money. You are completely helpless and stuck.

These three additional points pretty much sum up most of the scenarios that you might across when renting a flat in Mumbai.

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