Rentals in major cities across the country have shown a steady increase of 9.2 to 21 percent in 2024 compared to the previous year. This growth can be attributed to factors such as migration, a scarcity of high-quality housing, and a demand for better amenities. According to data from Anarock, the largest increase in rentals was observed in Noida's Sector 150, while the lowest was in Mumbai's Chembur suburb.
With the exception of Mumbai and, to a lesser extent, Chennai, all other cities experienced double-digit growth in rentals. In Mumbai, rental prices rose by just under 10 percent, while in Chennai, the growth ranged from 9.4 to 10.3 percent.
Average rental rates in Bengaluru's Sarjapur region saw an increase of 16.8% in 2024, while Thanisandra experienced a rise of approximately 11%. In the National Capital Region, rental prices surged by 12.2% in Sohna Road and nearly 22% in Noida's Sector 150.
“Rising home rents are a reflection of strong urban housing demand, driven by economic activity and migration trends,” said Ram Naik, Co-founder and CEO of The Guardian Real Estate Advisory.
The desire for home ownership has increased significantly following the Covid-19 pandemic, leading to a rise in rentals as new properties offer modern amenities. The high demand for homes in the past few years has driven up prices, resulting in landlords seeking higher returns on their investments. Residential rents have experienced a nearly 30% increase over the last three years as a result.
Budget 2025 and TDS on rental income
In the Union Budget 2025, Finance Minister Nirmala Sitharaman announced an increase in the annual tax deduction at source (TDS) limit for rent from Rs 2.40 lakh to Rs 6 lakh. This adjustment aims to reduce the number of transactions subject to TDS, providing relief to small taxpayers.
Effective April 1, 2025, TDS must now be deducted on house rent payments exceeding Rs 50,000 per month or part of a month. Previously, this requirement was triggered when rent payments exceeded Rs 2.4 lakh annually, which was previously set at Rs 1,80,000 until FY 2018-19.
This change impacts individuals involved in rental transactions subject to TDS, including those pertaining to residential, commercial, or other properties. By raising the annual TDS threshold for rent to Rs 6 lakh, fewer lower-value rental transactions will be subject to TDS deduction.
The new regulation provides a significant advantage to landlords, especially smaller ones earning rent below Rs 6 lakh annually, as tenants are no longer required to deduct TDS on the rent. Additionally, tenants paying lower rent amounts will benefit from reduced paperwork and compliance responsibilities associated with TDS deduction and remittance.