₹1.26 Trillion Locked in as Security Deposits With Property Owners: Study

A massive chunk of tenant capital is currently locked away in the form of security deposits across India’s top real estate markets. According to a recent study by prominent proptech platform NoBroker, an estimated ₹1.26 lakh crore (₹1.26 trillion) is held by property owners as security deposits across six major metropolitan cities: Mumbai, Bengaluru, Delhi-NCR, Hyderabad, Chennai, and Pune.

The study highlights how steep security deposits are restricting tenant mobility. In Bengaluru, a staggering 75% of tenants reported being unable to move into a house of their choice simply because they could not afford the exorbitant upfront deposit. Conversely, Delhi-NCR presents a much better scenario for renters; 58% of tenants received their full deposit back at the end of their lease, and only 12% reported facing disputes over refunds.

Breaking down the locked security deposit figures across the major metros, Mumbai tops the list with a staggering ₹41,156 crore. Bengaluru follows next with ₹31,628 crore, while the Delhi-NCR region accounts for ₹24,054 crore. Chennai and Hyderabad hold ₹17,346 crore and ₹6,843 crore respectively, with Pune rounding out the list at ₹5,015 crore.

The Crushing Burden of Rent and Unaffordable EMIs
The report sheds light on a grim financial reality for the urban middle class: rent is consuming nearly half of the average employee’s monthly budget. The situation is most severe in Mumbai, where 4 out of 10 tenants spend more than 40% of their monthly income solely on rent.

Historically, the Indian middle class viewed renting as a temporary phase, opting to transition to homeownership by paying Equated Monthly Installments (EMIs). However, the landscape has completely flipped since 2021. The gap between monthly rent and home loan EMIs has widened drastically. For instance, in cities like Bengaluru and Hyderabad, the financial burden of an EMI is now 2.4 times higher than the cost of renting the same property. As buying a house becomes financially unviable, a large segment of the middle class is being forced to remain lifelong renters simply to manage their household budgets.

Gen-Z Drives High Mobility While Small Homes Yield More
The rental market is also witnessing a significant demographic shift in consumer behavior. Generation Z (aged 18–24) is moving houses at a rate 1.5 times higher than previous generations. Approximately 30% of Gen-Z tenants shift to a new rental home every 6 to 12 months, whereas only 10% of renters over the age of 35 exhibit this frequent mobility, indicating that geographical stability increases with age.

From a real estate investment perspective, smaller housing formats are proving to be far more lucrative. Investors are seeing significantly higher rental yields from 1 BHKs and studio apartments compared to larger 3 BHK or 4 BHK homes. Bengaluru leads the charts with a maximum rental yield of 4.8% in the small-format segment, closely followed by Hyderabad with a strong yield of 4.6%. The NoBroker study clarifies that as the size of the apartment increases, the proportional rental yield drops sharply, often falling below the 3% mark for larger properties.