How is high rent affecting the lifestyle and savings of Mumbaikars?

dandy, 23, pays 50,000 as rent and says she has lost a good deal soon after the second wave of Covid-19. “Similar apartments in the building are now charging 60,000 fare,” she said.

You might also like

What is the reason for the Great Indian Airport Jam?

Eye on foreign exchange hoarding for industrial policy finance

Cool hiring craze is good news for IT companies

Cartels may get chance to settle cases without admitting guilt

like a dandy (See the list)For most Mumbai residents, renting involves a considerable deal: location and size of the house, proximity to workplace, ease of access to essentials and utilities and also the quality of building construction. It is very difficult to fit all these factors into their budget, while a high rent can also reduce their ability to spend elsewhere.

Take the case of Abhishek Srivastava (see picture)About a year ago, he moved to Mumbai with his wife and two children. to make room for 40,000 as rent he pays here, Srivastava has had to cut down on the family’s weekly outings considerably. “We have cut down on lifestyle expenses from 25-30% of our combined salary to around 5% after moving to Mumbai. Other expenses, like children’s education, investments etc are important,” Srivastava said.

The pinch of high rents is felt more by those who live in metro cities other than Mumbai, as is the case with Srivastava. He owns a 3-BHK in Noida (in the National Capital Region, or NCR), and it is almost three times the size of the apartment he rents in Chembur, a large suburb in central Mumbai. “My home loan EMI is less than the rent I am paying here,” said Srivastava, who works in a sales function in the banking, financial services and insurance (BFSI) industry.

Rent accounts for about 25% of Srivastava and his wife’s combined salary, yet there’s nothing special they like about their apartment – ​​it’s small for their liking, the fittings are out-of-date and the construction is poor. “We focused primarily on a location close to the office because our kids are very young and either of us can get home quickly in case of an emergency.”

Will they relocate again if their income increases? No, “Shifting also involves an additional cost of brokerage equal to one month’s rent and ‘packing and moving’ charges. We will continue to live here for some time,” Srivastava said.

The difference in rents in Mumbai and other metro cities is huge – anywhere in the range of 40-100%. For example, a 2-BHK unfurnished apartment in an upscale residential area in Delhi can be rented for 30,000-40,000, while a similar locality in Mumbai would start at 50,000 and even go above 1 Lac. Rents in NCR including Gurgaon and Noida, which are hubs of private sector jobs, are 15-30% cheaper than Delhi. As per industry reports, there is no tangible difference in salaries offered for similar job roles in Mumbai versus other metros, such as Bangalore or Delhi, despite the higher cost of living.

Shivank Sharma, 32, knows this too well. Sharma (See the list) pays 70,000 for a 2-BHK plus study room flat in Andheri East and said a similar flat would be 40% cheaper in Gurgaon. “When I moved from Gurgaon to Mumbai, my rent doubled, but income grew only by 9%,” said Sharma, vice-president of a direct-to-consumer company.

How much is too much?

As a general rule, financial planners suggest that rental expenses should not exceed 20-25% of one’s income. “I suggest a one third formula for spending, savings and home loan EMI. When you are renting, one-third of the EMI cannot be replaced by rent as in that case you will never be able to fund the down-payment to buy your home. Therefore, 33% should be broken down to 20% for rent and the rest should be saved for down payment. Someone who does not want to buy a home can increase the rental component by 33-35%,” said Amol Joshi, founder, Plan Rupee Investment Services.

most tenants who Peppermint Spoken to think that the rent is high despite being within the 20% cap.

For some, the reason is that it does not give them value for money, while others say that the high rent has an impact on the cost of other services which increases the overall cost of living in the city.

Sharma, for whom rent accounts for 15% of his and his wife Abhilasha Singh’s total income, says the high cost of living in Mumbai is not just limited to rent. He is paying more to maids and other service providers in Mumbai than in Gurgaon, where he used to live, and also for commuting. “The high rent also affects their (workers) lifestyle, so they charge enough to sustain themselves. Moreover, in trying to find affordable accommodation, we have also compromised on the location. So whenever we want to travel to Bandra or other areas that have better restaurants and cafes, we have to spend extra fuel,” Sharma said.

Pramod Dwivedi (See the list), who recently moved to Powai from Chandivali, shares a similar experience. “Where I live now, the cost of such services is high because the perception is that people living in this area have high incomes. So upgrading in Mumbai doesn’t just come with higher rents,” he said. Dwivedi upgraded from a 535 sq ft 1-BHK flat to her current 1,400 sq ft 2-BHK for more space and better amenities. “My apartment is open on three sides, which is hard to find in Mumbai, and has large French windows. The rent, along with other costs, has increased by 180% compared to my previous home. The rent currently suits my budget But if it goes up significantly next year, said Dwivedi, head of sales at a boutique asset management firm (AMF), I might have to reconsider being here.

Since income does not keep pace with rent and other expenses, the quality of living may feel inferior for most expatriates moving to Mumbai. Sharma said that he does not see himself in Mumbai for very long. “My expenses have skyrocketed and savings have taken a big hit trying to maintain a certain standard of living.”

Dwivedi said that after seven years, he has got used to small spaces. But, he offers a word of caution to newcomers. He said, “For anyone who wishes to move to Mumbai, I suggest they should get 80% increment, lest they have to compromise on their lifestyle for the next three to four years.”

Elsewhere in Mint

In opinion, Vivek Kaul says youth rise of india may shrink. Niranjan Rajadhyaksha writes about learning from him Our Experiments With E-Rs, Sakshi Abrol says EU green activism protectionism in fact. long story observes Boom in education loan,