High up, and soaring – The Hindu

By the third home visit of the day, the temperature in Chennai had settled in and S. Vasanth realized that his budget was no longer viable and the main neighborhoods in the city were out of bounds. What starts as an ordinary search for a house in Chennai turns into a compromise for tenants like him. A slightly smaller house, a longer trip, and a bigger budget are not part of the plan but necessary compromises.

The experience of renting a house has changed in recent years, sometimes becoming a tiring endeavor. Chennai’s rental market is heating up and renters are feeling the pressure. While rents are predicted to rise by 11 to 14 percent annually, even smaller homes are seeing annual increases of INR 1,500 to 2,000, raising concerns about affordability.

Jayanthi and her husband moved to the city from Pollachi to settle into their new job. For them, this change was very sharp. About six years ago, the couple rented a three-bedroom flat in a gated community for ₹25,000-₹30,000; while independent houses were rented for ₹15,000-₹17,000. Today, an 800 sq ft two-bedroom flat costs ₹30,000-₹40,000, reflecting a sharp post-pandemic rise due to return-to-office mandates and increased demand near the Information Technology Corridor. In five years, he shifted four houses in areas like Perungudi and Thoraipakkam due to various factors such as dust and water scarcity.

Locality matters

Nearly 49% of households in Chennai still rely on rental accommodation, according to data compiled to draft Tamil Nadu’s housing and living space policy. Locals say finding housing near reputed schools is difficult due to high rents, with two-bedroom flats costing between 38,000-40,000 rupees excluding maintenance charges, which can go up to 7,000 rupees in several parts of South Chennai.

For many, moving to the city is difficult. The monthly rent for a three BHK flat of 1,800 sq ft in Adyar starts from ₹ 1.2 lakh and the monthly rent of a 1,900 sq ft flat in T. Nagar is around ₹ 75,000. In exclusive neighborhoods like Abhiramapuram, rents for a two-bedroom unit can go up to ₹75,000. The pressure of increasing rents affects economic segments. Saravanan, an auto driver, said the rent for a 300 sq ft unfurnished single BHK flat in Alamelu Manga Puram in Mylapore is ₹10,000. Many IT professionals who share accommodations find it manageable. But families with additional expenses are under pressure. While some flats are available for rent, areas like Mylapore and Abhiramapuram are priced at around ₹ 10 lakh for three years for a BHK flat, putting them out of the reach of daily wage earners.

Demand for rental housing in core areas remains strong. Most of the flats in RA Puram, a 500-unit apartment complex near Govindasamy Nagar, were rented out within seven months of construction. “A 550 sq ft flat here is rented for ₹35,000. People are willing to pay for location, water supply and transportation facilities,” Mr. Saravanan added. Post-pandemic recovery is also an important factor. D. Karthikeyan, a resident of Anna Nagar Sixth Street, said the rent of his old 2.5 BHK flat has increased from ₹18,000 before the pandemic to ₹23,000 now. Another Anna Nagar resident, L. Jayaseelan, said that a new 2-BHK flat was rented for around ₹60,000. Corporate tenants and commercial users also increased prices.

Metro Rail effect

Infrastructure improvements have further impacted rental trends. In North Chennai, Metro Rail connectivity has led to a rise in rentals, especially between Tondiarpet and Wimco Nagar. Residents stated that the monthly rent in areas like Royapuram and Tondiarpet has increased by a minimum of ₹5,000. Pointing to the gap between demand and availability of rental homes, residents suggested that increasing the floor space index (FSI) at the same level as other cities could improve housing supply and ease rent pressure.

Even in the suburbs, residents face high rental costs. A three BHK house of 1,500 sq ft in Porur is rented for a minimum of ₹55,000. In Madhavaram, rents have almost doubled in six years to ₹25,000. J. Ravi of Madhavaram said: “The renovated bus terminus, better out-of-city public transport, rich groundwater level and road access to other areas have attracted more settlers. But high maintenance costs make it less lucrative for homeowners.”

Residents like Ms Jayanthi noted that tenants’ expectations for facilities were often met with resistance. Many choose gated communities for security and amenities like elevators and parking. But high demand and limited availability make it difficult to access them at affordable prices.

Greater Chennai Corporation (GCC) officials said increased property taxes have contributed to higher rental values. The Gulf Cooperation Council’s annual property tax collection has increased from ₹ 1,000 crore before the pandemic to ₹ 2,000 crore in 2025-26. Chennai Metrowater has also revised water and sewerage tax charges.

Market driven rise

Landlords also noted that this was largely market driven. Krishnamurthy, who owns three houses in T. Nagar, said there is no fixed parameter. “A Metro Rail line coming near my house will increase accessibility for tenants. New flats in the area cost around £35,000 for a two BHK house. I have also increased the rent of my properties.”

Another homeowner in Saidapet attributed the increase to higher incomes. “Earning capacity used to be lower. Now many people earn more. Therefore, rent increases are justified,” he said.

Market forecasts also broadly reflect this trend. Saurabh Garg, co-founder and Chief Operating Officer of real estate platform NoBroker, said rents in Chennai have increased in line with income growth, making Chennai one of the balanced and tenant-friendly rental markets among Indian cities. The 11% annual growth of the Chennai rental market has placed it in the mid-range among major Indian cities. Mumbai had the fastest increase at 19%, followed by Bangalore at 13%. Pune comes in at 10%, Delhi at 8% and Hyderabad at 7%.

According to data compiled by NoBroker, most of the premium listings are unfurnished (55% to 81%), indicating that tenants in upscale areas of Chennai prefer to furnish their homes themselves. Kanathur stands out as an outlier, with large houses averaging 1,159 sq ft with a 31% furnished share, reflecting the gated community culture along Old Mahabalipuram Road. “Various signals point to continued rent growth next year, but in an uneven manner. Suburban acceleration will continue. Areas such as Medavakkam, Madambakkam, Kolapakkam and Mogappair East have seen a 20%-35% increase. As new projects are occupied and Metro Rail connectivity improves, these corridors are likely to see similar growth,” he said.

Near-flat growth

Premium settlements may plateau. “Areas like Adyar (+1.1%), Velachery (+3.1%) and Mylapore (+4.9%) are showing single-digit or almost flat growth, indicating that they have reached the rent ceiling for their tenant profile,” Mr. Garg said. Noting that OMR/IT Corridor demand remains strong, he said Perungudi (+17.5%), Sholinganallur (+7.1%) and Thoraipakkam (+7.3%) continue to benefit from Chennai Corporation’s IT hiring and expansion. Generally speaking, an increase of 8-11 percent citywide is a reasonable expectation. “Chennai is unlikely to see Mumbai-style rises but will continue to remain on a steady uptrend.”

Independent real estate agents have noted that rents have increased by 20 percent to 30 percent since the pandemic. Part of the increase is due to the difference between demand and available rental homes. The sharpest increases were in the IT Corridor and fast-growing suburban belts such as Sholinganallur and Tambaram. Real estate broker R. Ganesan said that the most important factor increasing rents in certain parts of the city is the expansion of the Metro Rail System. This is already reflected in areas along new corridors such as Porur, Poonamallee High Road, Madhavaram and parts of north Chennai.

Manohar, another broker operating in the Velachery-Medavakkam belt, said that tenant preferences have also changed after the pandemic. “People now want apartments that are secure, have amenities and easy access to office spaces, and they are willing to pay more,” he said. Homeowners are also becoming more selective. “Owners prefer tenants with stable jobs, and many offer higher rents because they know people can pay them,” he said.

Explaining the reasons for the rapid increase in some parts of Chennai, A. Balasubramani, founder president of CMDA/DTCP Registered Engineers Welfare Association, said that rents, which stagnated between 2020 and 2022 due to the pandemic, have been revalued. That adjustment led to a nearly 30% increase in rents in pockets of upscale neighborhoods because the usual 10% annual increases were not imposed by landlords during the pandemic.

He pointed out that more than 25 percent of the houses rented by professionals remained empty during the pandemic as they traveled to their hometowns. With the revival of economic activity, rental demand has increased and many areas in the Chennai Metropolitan Region have seen residential rents increase by over 30% in 2026 compared to pre-COVID levels. Business assets in select locations saw a steeper increase of 40%.

While there is a sustained demand for housing driven by the expanding employment ecosystem, unlike other cities like Mumbai, Bengaluru and Hyderabad, supply expansion is challenged by stringent planning norms, especially FSI caps, which restrict vertical development in the city. Ashyanth Ramasamy of KG Realtors, a firm involved in high-rise residential projects across the city, said a calibrated relaxation of FSI norms could help unlock additional supply.

Tamil Nadu has the potential to develop real estate investment trusts, which are entities that own and manage income-producing real estate such as office buildings or rental housing, and enable people to invest. This could deepen corporate involvement in real estate, he added.

government buildings

Meanwhile, in the public sector, the Public Works Department fixes rents of government buildings, including government buildings, under the Tamil Nadu Buildings (Rent and Rent Control) Act, 1960. The rents of such properties are usually revised by 10% annually and the department oversees assessment and collection through its own rent cell. Disabled sources said that the ministry also collects rent from private individuals occupying buildings rented by the state. However, its role in private rental markets remains limited and disabled people only intervene when disputes over private premises go to court and calculate rents to resolve the issues.

The 1960 Act has been largely superseded by the Tamil Nadu Landlords and Tenants’ Rights and Responsibilities Ordinance 2017. The law includes provisions including a mandatory written lease agreement to be submitted to the leasing officer within the Department of Housing and Urban Development. Compliance remains poor, with many leases not officially registered online. This points to a wider regulatory gap in the private rental housing segment, marked by slow implementation of the Act and poor compliance at a basic level.

Experts have called for stronger enforcement through periodic inspections and even surprise checks on tenancy registration to bring accountability to Chennai’s rental market.

(With contributions from Sangeetha Kandavel, R. Aishwaryaa, Aloysius Xavier Lopez and Geetha Srimathi.)