₹1.26 lakh crore in rental deposits: How verified data could transform India’s housing market

India’s rental housing market has ₹1.26 lakh crore locked in security deposits across six major metros, highlighting the scale of tenant capital tied up in the rental ecosystem. Industry experts say greater use of verified rental data could help reduce information gaps between landlords and tenants while opening up new financial services.

According to a recent study cited by Sarika Shetty, CEO and co-founder of RentenPe, Mumbai-MMR accounts for the largest share of rental security deposits at ₹41,156 crore, followed by Bengaluru at ₹31,628 crore.

A security deposit is a refundable amount paid by a tenant to protect the landlord against unpaid rent, property damage or other dues. The deposit is generally returned when the tenancy ends, after any valid deductions. Under the Model Tenancy Act, where adopted by a state or Union Territory, residential security deposits are capped at two months’ rent, while commercial deposits can be up to six months’ rent.

The rental agreement should clearly specify the deposit amount, permitted deductions and refund timeline. Tenants should also document the property’s condition at move-in and move-out, pay dues on time and ensure any deductions are supported by a written breakdown. Clear clauses can help prevent disputes over refunds.

Rental payment history

Shetty said the figures point to a broader issue in India’s rental housing market, where both sides often lack reliable information about each other.

“The landlord has no sure way to know about the financial or rental history of the tenant whereas the tenant doesn’t have any information regarding how the deposit is evaluated or returned,” Shetty said.

Verified rental data could help address this information asymmetry by creating a more reliable record of a tenant’s payment behaviour and rental history.

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Regular rent payments, when verified, can provide insights into a tenant’s financial stability, payment capacity and tenancy behaviour that may not be fully captured by traditional credit data. For landlords, verified KYC information, rental history and property-level records could help assess tenant risk and potentially reduce disputes.

The data could also have implications for lenders and financial institutions. Rental payment behaviour could become an additional input when assessing products such as security-deposit financing, rent-linked credit and other housing-related financial services.

Digital rental agreements

India’s increasing adoption of digital rental agreements and formal tenancy processes is creating the infrastructure needed to capture and verify rental information, according to Shetty.

The broader opportunity, she said, is to move away from a rental market that relies heavily on informal documentation and individual trust towards one supported by verified data.

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Such formalisation could benefit both tenants and landlords. Tenants with a consistent rental record could potentially build a stronger financial identity, while landlords could gain access to better information before entering into a tenancy agreement.

The development of a more structured rental-data ecosystem could therefore help unlock capital currently tied up in deposits, reduce information asymmetry and support the emergence of new financial products linked to housing and rental behaviour.