By the third home visit of the day, the heat in Chennai has subsided and S. Vasanth has also come to this realization – their budget is no longer viable, and the downtown neighborhoods are out of bounds. In Chennai, what starts as a routine house search turns into a deal for tenants like him. A slightly smaller home, a longer commute and a bigger budget are not part of the plan, but are necessary compromises.
In recent years, the experience of renting a home has changed, becoming a tedious task at times. Chennai’s rental market is heating up, and tenants are feeling the pinch. Rents are projected to increase by 11%–14% annually, with even small houses rising by ₹1,500–₹2,000 annually, raising concerns about affordability.
Jayanti and her husband moved to the city from Pollachi to settle into their new jobs. This change has been very difficult for him. About six years ago, the couple rented a three-bedroom apartment in a gated community for ₹25,000-₹30,000, while independent houses were available for ₹15,000-₹17,000. Today, even an 800 sq ft two-bedroom apartment costs ₹30,000-₹40,000, showing a sharp rise post-pandemic, driven by return-to-office orders and rising demand near the information technology corridor. In five years, he shifted four houses to areas like Perungudi and Thoraipakkam, due to various factors including dust and water scarcity.
Locality matters
According to data compiled to draft the housing and housing policy of Tamil Nadu, about 49% of households in Chennai are still dependent on rental housing. Residents say it is difficult to find homes near reputed schools due to high rents, with a two-bedroom apartment costing ₹38,000-₹40,000, excluding maintenance charges, which can go up to ₹7,000 in different localities in South Chennai.
For many people, getting into the city is difficult. In Adyar, the monthly rent for a 1,800 sq ft three-BHK flat starts from ₹1.2 lakh and the monthly rent for a 1,900 sq ft apartment in T. Nagar is around ₹75,000. In premium neighborhoods like Abhiramapuram, rents can go up to ₹75,000 for a two-bedroom unit. The pressure of rising rents falls on economic classes. Saravanan, an autorickshaw driver, said the rent for an unfurnished 300 sq ft one-BHK flat in Alamelu Manga Puram, Mylapore is ₹10,000. Many IT professionals who share housing find it manageable. But families are under stress due to additional expenses. While some flats are available on lease, a one-BHK flat for three years in areas like Mylapore and Abhiramapuram costs around ₹10 lakh, making them out of the reach of daily wage earners.
Demand for rental housing remains strong in key areas. In the 500-unit apartment complex at Govindasamy Nagar, near RA Puram, most of the flats were rented out within seven months of construction. “The rent for a 550 sq ft flat here is ₹35,000. People are willing to pay for space, water supply and transport facilities,” Mr Saravanan said. Recovery after the pandemic is also a major factor. D. Karthikeyan, a resident of Anna Nagar Sixth Avenue, said the rent of his old 2.5-BHK apartment has increased from ₹18,000 before the pandemic to ₹23,000 now. Another resident of Anna Nagar, L. Jayaseelan said the rent for a new 2-BHK apartment is around ₹60,000. Corporate tenants and commercial users have also increased prices.
impact on metro rail
Improvements in infrastructure have further influenced rental trends. In North Chennai, metro rail connectivity has pushed up fares, especially between Tondiarpet and Wimco Nagar. Residents noted that the monthly rent has increased to a minimum of ₹5,000 in areas like Royapuram and Tondiarpet. Pointing to the gap between demand and availability of rental homes, residents suggested that increasing the floor space index (FSI) at par with other cities could improve housing supply and reduce rental pressure.
Even in the suburbs, residents face expensive rental rates. In Porur, a 1,500 sq ft three-BHK house is rented for a minimum of ₹55,000. In Madhavaram, rents have almost doubled in six years to ₹25,000. Madhavaram K J. “The renovated bus terminus, better outbound public transport, a rich groundwater level and road access to other areas have attracted more residents. But high maintenance costs are making it less attractive for homeowners,” Ravi said.
Residents like Ms Jayanti said tenants’ expectations for amenities are often met with resistance. Many people prefer gated communities for security and amenities like lifts and parking. But due to high demand and limited availability it becomes difficult to get them at affordable prices.
Greater Chennai Corporation (GCC) officials said rising property tax has contributed to the rise in rental prices. The GCC’s annual property tax collection increased from ₹1,000 crore before the pandemic to ₹2,000 crore in 2025-26. Chennai Metrowater has also revised its water and sewer tax charges.
market driven growth
Landlords noted that this is also largely market-driven. Krishnamurthy, who owns three houses in T. Nagar, said there are no fixed parameters. “The metro rail line coming close to my house will improve accessibility for tenants. New apartments in the area cost around ₹35,000 for a two-BHK house. I have also increased the rent on my properties.”
Another landlord from Saidapet attributed this increase to higher income. “Earlier, the earning potential was less. Now, many people earn more. Therefore, the fare increase is considered justified,” he said.
Market estimates also broadly reflect the same trend. Saurabh Garg, co-founder and chief business officer, real estate platform NoBroker, said rents in Chennai have been rising in line with income growth, making Chennai one of the balanced and tenant-friendly rental markets among Indian cities. The Chennai rental market’s annual growth of 11% has placed it among the major Indian cities. Mumbai leads with the sharpest jump at 19%, followed by Bangalore at 13%. Pune comes at 10%, Delhi at 8% and Hyderabad at 7%.
According to data collected by NoBroker, most of the premium listings are unfurnished (55%-81%), indicating that tenants in top localities of Chennai choose to furnish homes themselves. The large 1,159 sq ft homes have a 31% furnished share, reflecting the gated community culture along Old Mahabalipuram Road. “Many signs point to sustained but uneven rental growth in the coming year. Suburban acceleration will continue. Areas like Medavakkam, Madambakkam, Kolapakkam and Mogappair East have seen 20%-35% rent growth. As new projects come up and metro rail connectivity improves, these corridors are likely to see similar growth,” he said.
almost flat growth
Premium areas can be stabilized. “Areas like Adyar (+1.1%), Velachery (+3.1%), and Mylapore (+4.9%) are showing single-digit or near-flat growth, suggesting they have hit the rent ceiling for their tenant profiles,” Mr Garg said. Pointing out that demand for the OMR/IT corridor remains strong, he said Perungudi (+17.5%), Sholinganallur (+7.1%), and Thoraipakkam (+7.3%) continue to benefit from Chennai Corporation’s IT recruitment and expansion. Overall, an 8%-11% growth across the city is a reasonable expectation. “Chennai is unlikely to see a Mumbai-style boom, but it will remain on a sustained upward trend.”
Independent real estate brokers reported that rents have increased between 20% and 30% since the pandemic. This growth is also partly due to the gap between demand and available rental homes. The fastest growth has been in the IT corridor and fast-growing suburban belts like Sholinganallur and Tambaram. Real estate broker R. Ganesan said that a major factor increasing fares in select areas of the city is the metro rail expansion. This is already visible in new corridors like Porur, Poonamallee High Road, Madhavaram and parts of North Chennai.
Another broker, Manohar, who operates in the Velachery-Medavakkam belt, said tenants’ preferences have also changed after the pandemic. “People now want apartments with security, amenities and easy access to office areas, and they are willing to pay more,” he said. Landlords are also becoming more selective. “Owners prefer tenants with stable jobs, and many are quoting higher rents because they know people can pay,” he said.
Explaining the reasons for the huge spike in cases in some parts of Chennai, CMDA/DTCP Registered Engineers Welfare Association founder-president A. Balasubramani said the fares that were stuck between 2020 and 2022 due to the pandemic were reevaluated. The reform led to rents in luxury neighborhoods rising by nearly 30%, as the normal annual increase of 10% was not implemented by landlords during the pandemic.
He pointed out that more than 25% of the houses rented by professionals became vacant during the pandemic, as they left for their native places. With the revival of economic activity, rental demand increased, and many localities in the Chennai metropolitan area are expected to see residential rents rise by more than 30% in 2026 compared to pre-Covid levels. Commercial assets have witnessed a sharp growth of 40% in select locations.
While there is continued demand for housing driven by the expansion of the employment ecosystem, supply expansion is strained due to strict planning norms, especially FSI limits, which restrict vertical growth in the city, unlike other cities like Mumbai, Bengaluru and Hyderabad. A graduated relaxation in FSI norms could help unlock additional supply, said Ashyanth Ramasamy of KG Realtors, a company involved in multilevel housing projects across the city.
Tamil Nadu has the potential to develop real estate investment trusts, entities that own and manage income-producing real estate, such as office buildings or rental housing, and allow people to invest. He said this could deepen institutional participation in real estate.
government buildings
Meanwhile, in the public sector, the Public Works Department fixes the rents of government buildings, including government quarters, under the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960. Rents for such properties are generally revised 10% annually, with the department overseeing assessment and collection through its rent cell. PWD sources said the department also collects rent from private individuals occupying government-leased buildings. However, its role in private rental markets is limited, and the PWD only intervenes when disputes related to private buildings go to court and calculates rents to resolve the issues.
The 1960 Act has been largely replaced by the Tamil Nadu Regulation of Rights and Responsibilities of Landlords and Tenants Act, 2017. There are provisions in the law, including a mandatory written rental agreement, which has to be filed with the rent authority under the Department of Housing and Urban Development. Compliance remains weak, with many tenancy agreements not formally registered online. This points to the wide regulatory gap in the private rental housing segment, which is marked by lax enforcement of the Act and poor compliance at the ground level.
Experts have called for stronger enforcement through periodic audits and even surprise checks on tenancy registrations to bring accountability in Chennai’s rental market.
(Sangeeta Kandavel, R. With inputs from Aishwarya, Aloysius Xavier Lopez and Geetha Srimathi.)
