Demand for low rental flats surge amid layoffs and pay cuts, Real Estate News, ET RealEstate

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Karnataka: Demand for low rental flats surge amid layoffs and pay cutsHUBBALLI: Several families living in rented three/two-bedroom flats and independent houses in North Karnataka’s urban areas are now shifting to smaller apartments so as to manage monthly expenses after the Covid-19 pandemic stalled economic activity at an unprecedented scale in the country. Some are also re-negotiating the rent with their landlords to cut the rents.

Covid-19 has taken a toll on the employees of private firms with massive layoffs and salary cuts.

Mayur Patil, a private employee, said he was paying rent of Rs 9,000 per month for a 2BHK flat in an apartment at Akshay Park, Vidyanagar. “As my salary is reduced by 10%, we are shifting to a 1-BHK house in same locality where we will pay Rs 5,000. When we requested the landlord, who is also a private employee, to reduce the rent, he helplessly said his salary has also been cut by 15%. So, sharing a cordial relation with the landlord, we have no option other than shifting to a smaller house,” he added.

Dr SV Sullad, a house owner in Akshay Park, said that most landlords have loans to be repaid. “Only three-month moratorium has been announced for our EMIs. We will have to continue paying banks as usual later. If government announces reduction in interest, we can reduce the rent accordingly,” he added.

Economics professor Krishnaveni D said demand and supply are hand-in-hand in rented accommodation market. “As the purchasing power of people decreases, lower middle and economically backward people will struggle to meet their daily needs. House rent being a major debit middle class salaries, they will definitely intend to reduce it. Falling GDP and deflation of market are even affecting elites. Worry of unemployment is another reason. All these factors are forcing tenants to shift to lower rental houses,” she said.

“Government’s announcement to defer EMIs for three months and insisting landlords not to collect rent forcibly won’t be helpful in this context. Most salaried employees are worried about the future as the financial crisis is expected to continue for another two years,” she observed.

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