If you let a home in Bengaluru, you have probably read this year that the law now limits your deposit to two months.
It doesn’t. That limit belongs to the Model Tenancy Act, which Karnataka has not adopted, and the state’s Rent Act does not apply above ₹3,500 a month. You can ask for what you like.
That makes the deposit a decision rather than a rule, and it is worth four minutes of arithmetic.
What a large deposit earns you
Take a home let at ₹1,00,000 a month. Ten months’ deposit is ₹10 lakh. Three months is ₹3 lakh. The difference is ₹7 lakh of a tenant’s money that you hold for the tenancy. What the law actually says.
So asking for ten months instead of three is worth about ₹4,080 a month to you, parked somewhere sensible. Real money, and small next to the next number.
What it costs you
A vacant month on a ₹1,00,000 home costs ₹1,00,000, plus painting and re-listing.
If a smaller deposit lets your home three weeks sooner, it has paid for the year.
And it plausibly does. A tenant who needs ₹10 lakh on the day for the deposit alone comes from a short list of people with that much sitting idle. Three months widens the list to everyone who can pay the rent.
A large deposit filters for liquid tenants. That is a different quality from being a good one.
If the deposit is repaying the last tenant
Many owners set the deposit at whatever they owe the tenant leaving, so they never fund the gap themselves. It is a reasonable instinct and it has a cost.
It ties your deposit to your predecessor’s, however long ago that was set. It makes a lower figure feel impossible even when it would let the home faster. And a tenant who understands it will ask when their own money comes back, which is a fair question.
The fix is usually timing: take the incoming deposit in two parts, or have it paid straight to the outgoing tenant against your written instruction.
Tenants are reading about the same thing. Ten months’ deposit isn’t always ten months’ deposit.
What protects you better than a large deposit
The fair objection: the deposit is cover as well as float. If a tenant stops paying or damages the home, it is what you hold while you sort it out.
- A signed inventory with condition noted and dated photographs. This is what an exit deduction is argued from, and most landlords don’t have one.
- A tenant you have actually checked: employment, the previous tenancy, why they left.
- Rent paid by bank transfer, with the deposit recorded in the agreement.
- A notice period and a lock-in that end a bad tenancy quickly.
- Deductions defined in writing: what may be taken, on what basis, with what evidence.
Each of these makes the position clear before anything goes wrong, which is cheaper than holding money against it. What can be deducted, and what gets argued anyway.
The number to work out this week
Four minutes, on the back of something:
- 01 The deposit you ask for, and the lowest you would accept.
- 02 Multiply the difference by 7% and divide by twelve. That is what the larger deposit earns you a month.
- 03 Compare it with one month of vacancy.
- 04 Ask what the lower figure would do to how fast the home lets.
In almost every case the vacancy is the larger number. Most owners have been guarding the deposit while paying for empty months.
If you let a home in one of the nine neighbourhoods we work in and want the version of this with your own figures in it, send us the rent and the current deposit. It takes ten minutes and we will not follow it with a pitch.
