Every year in Mumbai, thousands of tenants, landlords, and brokers gather around dining tables, office desks, or WhatsApp chats to renew rental agreements. And almost like clockwork, the expectation is set: “Rent will go up by 10%.”
No one really stops to ask why. It’s just how things are done.
📈 The ‘10% Increase’ — A Tradition, Not an Economic Logic
There’s no formal rule or market-driven formula that mandates this annual hike. The 10% escalation has simply become a social and market habit, passed down over years of rental negotiations.
In reality, rent should reflect market demand, property condition, location dynamics, or changes in supply. But in Mumbai, where housing scarcity is a real issue, tenants often have little room to negotiate. Landlords expect the increase, brokers reinforce it, and tenants reluctantly accept it.
In some years, the real estate market stagnates. In others, the property may not have been maintained at all — leaking pipes, broken tiles, or paint peeling off. Yet, the rent still goes up. Why? Because “it always does.”
🧾 The Broker Fee Puzzle
Another unspoken norm is the brokerage on renewals.
Typically, in the first year, brokers charge one month’s rent as their fee — fair enough for the effort involved in finding a property and negotiating the deal. But many brokers demand the same one-month fee again during renewal, even when no new tenant search or extra work is done.
For a tenant paying ₹50,000 per month, that’s ₹50,000 again, simply for signing a piece of paper for the second year. Some argue it’s for “services” or “coordination” — but let’s be honest, it’s mostly an accepted practice, rarely questioned.
🏠 Why We Don’t Push Back
Part of the reason this continues is social inertia. Many tenants fear confrontation or losing their home in a competitive rental market. Landlords often mirror what they’ve seen others do. Brokers rely on these norms for steady income.
It’s a cycle where no one questions, so everyone follows.
But perhaps it’s time to ask:
- Is the property truly worth more this year?
- Has the market rent in that area actually increased?
- Should brokerages for renewals be regulated differently?
- And most importantly, do we, as tenants and landlords, have the courage to say, “No, let’s talk about this logically”?
🗣 The Market Moves When People Do
Real estate norms don’t change overnight. They shift when people start challenging defaults. Tenants can politely but firmly ask for justifications for hikes. Landlords can choose to be fair and realistic. Brokers can adapt their business models to reflect actual value addition.
For a city that prides itself on dynamism, Mumbai’s rental culture has remained surprisingly rigid. It’s time we re-examined these unwritten rules — because unquestioned norms eventually become unfair practices.
Also Read: Fractional Ownership vs. Traditional Real Estate: A Comparative Analysis
