Hasan Minhaj’s Netflix series, Patriot Act,returned on Netflix focusing on how the pandemic has led to record unemployment in the US, which has made it impossible for many people to pay rent. The episode made me wonder about the migrant salaried workforce here in India, who flocked to the big cities and spend anywhere close to 15-30% of their in-hand salaries every month – paying rents. While the big cities promised better jobs, the current Work From Home scenario is forcing everyone to think whether or not is it necessary to pay the high rents, while everyone could have just delivered work sitting from their actual homes back in their hometowns.
But with relocation being impossible because of the lockdown, I tried to research a bit on how people are coping up with this new found situation in India. Since a large chunk of the rental agreements are not legally registered, most of the negotiations with the landlords are offline, trying to arrive at a consensus on extending existing agreements, lowering/postponing rents until the time the pandemic induced lockdown ends. Several states have decreed the landlords not to force their tenants to pay rent for two to three months, they could be penalized for the act. Delhi CM even offered a direct cash transfer in case the rent burden was to stiffen.
Given the current situation, where the pandemic stands as an Act of God leading to future uncertainty and invoking a Force Majeure, as per legal experts, both the tenants and the landlord will have to mutually agree on such extension/renewal.
On future of Rental Space
Upon my research, I found the following points,
- Given the recession like scenario, the earnings through rental income for both residential and commercial premises will witness a dip
- Work from home will be another factor further pushing the real estate crisis both for domestic and commercial usage. If allowed to work from home and in the wake of deferred payments/salary cuts – most people will like to reverse migrate to their hometowns, while keeping the job.
- Not only will the landlords find it difficult to fill their vacant homes with new tenants, the rents itself will be at lower rates than the current going rates. This might lead to a lot of properties remaining vacan for longer periods of time
A word for the Property Owner
Nobody emerges as the victor in this situation. As most of the residential houses around us are real estate investments made by individual landlords and are fueled on housing loans, in the current crisis these landlords are suffering just as much as their tenants. The rents in such cases make for the payment of monthly loan EMIs. Several retired people, and other senior citizens also depend on the rental income as the sole source of monthly income.
Now in case the landlords wish to sell of the land, the high cost of land plus constructing residential properties previously, will now be met by recession, where they will not get their entire investment back. The recession might claim its chunk.
If the situation worsens, to avoid homelessness – the Govts will have to step in and protect the interests of both the tenants and the landlords. A few viable points are:
- Bring more and more rented spaces under the official rental agreements through simplified online portals to make the management easier
- Funds to be mobilized from the corresponding welfare & disaster management departments as well as through CSR activities. Crowd funding too can be opted in
Here’s an article from Financial Express which I found to be informative on the subject – To pay rent, or not? Tenant-landlord conflict in the time of Coronavirus legally explained
On a personal level, we can try and help the ones hard hit by the crisis such as our domestic helpers, drivers, office boys etc. We can reach out to them, and offer some financial assistance till the time they manage to get back up on their feet. Roti, kapda and makaan are basic human requirements, let’s do our bit to ensure a life of dignity to the lesser informed, lesser protected and lesser financially fortunate ones around us.