Heavy Deposit, Zero Rent: Mumbai’s Unusual Rental Model Raises Eyebrows After Violent Dispute
Heavy Deposit, Zero Rent: Mumbai’s Unusual Rental Model Raises Eyebrows After Violent Dispute
In Mumbai’s soaring rental market, the trend of zero-rent housing, where tenants pay hefty deposits instead of monthly rent, gains traction but a recent Jogeshwari incident exposes the risks for landlords.
In Mumbai’s high-demand housing market, a growing number of property owners and tenants are exploring a unique rental setup: the zero-rent, heavy deposit model. Under this arrangement, tenants avoid monthly rent payments by offering a large one-time deposit, typically covering the equivalent of 6 to 24 months’ rent upfront. In turn, landlords invest this sum, often in fixed deposits or low-risk instruments, to generate passive income through interest.
However, the model recently came under scrutiny following a disturbing incident in Jogeshwari, where a landlord filed a police complaint against a tenant who failed to pay the full ₹6 lakh deposit. After paying ₹4.5 lakh at the time of taking possession, the tenant allegedly refused to pay the remaining ₹1.5 lakh, which led to a violent confrontation. The tenant, in a fit of rage, reportedly rammed his car into the landlord.
Despite such risks, the model is gaining traction. According to a real estate consultancy, nearly a third of prospective tenants in Mumbai are open to paying high deposits in order to avoid monthly rental commitments. For example, someone looking to avoid a ₹20,000 monthly rent may offer a deposit of ₹20 lakh upfront. Similarly, ₹30,000 rent may translate to a ₹30 lakh deposit.
Government records show over three lakh leave and license agreements are registered in Mumbai annually, indicating a highly active rental scene.
A landlord from Virar shared his experience, noting that he was offered ₹7 lakh as a lump-sum deposit for three years on a flat he typically rents at ₹10,000 a month. However, upon calculating the returns, he realized a 10% interest on ₹7 lakh would yield only ₹2.4 lakh in three years—significantly less than the ₹3.6 lakh he would have received in traditional monthly rent.
Experts caution that while the heavy deposit model may provide liquidity useful for loan repayments or business needs, it carries risks. A Mumbai-based chartered accountant warned that unless the money is invested wisely to match or exceed potential rental income, it could become a liability. Moreover, landlords may struggle to reclaim their property without repaying the full deposit, leading to financial and legal complications.
In short, while the zero-rent model appeals to both landlords and tenants for different reasons, it demands careful financial planning, trust, and legal safeguards to avoid costly consequences.
