Gone are the days when tenants used to rent a home for years and sometimes decades. Urban renting landscape has drastically changed over past few years, particularly in the segment where rent is more than 10,000 rupees. In some cases tenancy just lasts months – we heard many such stories in the field. Many Owners we work with tend to assume that tenants stay for years once they rent a home – which is exactly the opposite of what we see in today’s metros.
Here are five reasons why it is impractical to expect a tenant to stay long:
1. Increase in career mobility: Unlike previous generation workforce which often retired with the same employer that they began their career with, this generation is ambitious, motivated, mobile and seeks best opportunities. Gen X prioritizes career aspirations over staying in one place or sticking to one employer. To support their ambitions, there are plenty of opportunities in modern India. As a result, professional turn over in India is at 17% compared to 15% in US and 11% UK.
2. Knowledge jobs are moving to suburbs: Even the work places are on the move. To avoid traffic congestion and to reap benefits of new age SEZs, Knowledge based companies such as IT, BPO and KPO companies are constantly relocating to new suburbs. As suburbs rapidly become part of the city, Knowledge jobs are moving further out to newer suburbs.
3. Increasing home ownership and affordability: It’s no secrete that average income levels have significantly increased over past decade or two. To add to that, home loans have become ubiquitous. All you need to own a home is a home loan and ability to pay the EMI – fortunately, this generation has both. When someone can buy a home and benefit from property appreciation, why would they rent? That is another reason why average tenancy duration is becoming shorter.
4. Quality of communities go down with time: For those who want to rent for a longer period, they are experiencing deterioration in quality of communities because gated communities require a lot of maintenance and apartments start showing problems with age. With a huge supply of new homes (and jobs relocating to suburbs), tenants prefer to rent a newer apartment rather than dealing with lower quality communities and apartments that constantly cause problems.
5. Every good school has wide transportation network: People no longer need to live very close to the schools their kids go to. Every good school has a good transportation that reaches 15-20 Kms radius and buses pick kids right in front of their home. Unlike many other countries, Indian school system is predominantly private and these schools deliver a good service even on transportation.
New economy. New dynamics. It’s time to rethink residential rentals.