India’s residential rental market is worth more than $20 billion with the Rental Bond opportunity estimated to be around $5-6 billion.
Eqaro Guarantees, a pioneer in the field of Surety Bonds has introduced Rental Bonds – a first of its kind in India. Eqaro Guarantees has announced partnership with FF21, one of the leading providers of co-living spaces based out of Bengaluru. In the current times of pandemic-infused economic stress, a large number of professionals from across the industries have witnessed job losses or pay cuts. With working professionals being the core target group of FF21, the co-living operator has come up with a ‘Zero Deposit Rooms’ proposition for its clients. The rental bonds offering by Eqaro Guarantees enable FF21 to formulate this new age offering apt in the current times of adversity. Under the arrangement, working professionals can move into FF21’s properties in Bengaluru without worrying about putting up a security deposit.
Rental Bonds are issued by a guarantee company that promises to pay the mentioned amount in the event of a default. It is issued on behalf of the tenant favouring the landlord. It covers unpaid rent, utility bills, or any other damage incurred to the property. Eqaro Guarantees will issue a customized Rental Bond on behalf of FF21’s clients, covering 90 days lock-in period and any unpaid rent during the tenure of the bond. The rental bonds issued by Eqaro Guarantees will help deliver ‘No Security Deposit Rooms’, at a nominal fee which will be charged to the tenants of FF21.
Eqaro Guarantees will also help provide landlords with credit verified and assessed tenants with an institutional guarantee. FF21, based out of Bengaluru operates 8 properties and aims to scale to over 50,000 beds by 2025. FF21 would be the pioneer in offering Zero Deposit Rooms through its partnership with Eqaro Guarantees and plan to disrupt the market with the offering.
As per a Knight Frank India report ‘Institutionalising the Rental Housing Market in India -2019’, nearly 11.09 million out of the 21.72 million residential units in urban India are lying vacant. It is alarming to see such a high percentage of vacancies despite a shortage of housing in urban India. The reason for the high number of vacant residential units is low rental yield, unfavourable rules & laws, the trust deficit between landlords and tenants. The recent approval of the Model Tenancy Act will stimulate rental activities across the countries.
India’s residential rental market is worth more than USD 20 billion, and the Rental Bond opportunity is estimated to be around USD 5-6 billion and expected to grow in tandem with the Rental market going forward. The co-living space has been growing at an impressive pace. As per a report, an additional 5.7 million beds will be required by 2025 in India with an estimated rental value of USD 13.9 billion. Bengaluru, the IT hub of India is the largest Co-living space representing approx. 20%+ of the market.
Pankaj Bhansali, COO & CBO, Eqaro Guarantees said “We are delighted with our partnership with FF21 where we are introducing the concept of zero deposit homes in the co-living space. Co-living is a huge and growing opportunity in a country like India which has a large population of young working professionals. One of the biggest challenges while renting out a property is the unavailability of the security deposit amount, irregular payment of rent by the tenants. Rental bonds will help bridge the trust deficit between the landlords and the tenants. It will enhance the ease of doing business of renting out properties in India. The new act will bring over 11 million urban houses into the rental market and help address the country’s massive housing shortage. Our offering will directly help solve these pain points at a fraction of the cost of the actual payment.”
Ajay Nemani, Founder & CEO, FF21 said “Since we cater largely to the young working professionals who are typically at the start of their careers, a zero-deposit & ready to move-in space acts as a great option as it reduces the cost of moving into a rental space and offers a higher level of financial freedom. At the same time, our interests as operators are also safeguarded through the rental guarantee. We are proud to be the first co-living operator to provide this option in partnership with Eqaro Guarantees, reaffirming FF21’s commitment to innovate and provide an enhanced experience for our customers. We believe this option will be whole-heartedly accepted by the market allowing us to drive up the demand as we prepare to come out of the tough times that the industry has faced over the past year and a half.”