High up, and soaring

By the third house visit of the day, the heat in Chennai has settled in and so has the realisation for S. Vasanth — his budget is no longer viable, and the core city neighbourhoods have become out of bounds. In Chennai, what begins as a regular house hunt turns into a compromise for tenants like him. A slightly smaller house, 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 house has changed, sometimes becoming an exhausting pursuit. Chennai’s rental market is heating up, and tenants are feeling the squeeze. With rents estimated to rise 11%-14% annually, even smaller homes come with yearly increases of ₹1,500-₹2,000, raising concerns over affordability.

Jayanthi and her husband moved to the city from Pollachi to settle into their new jobs. For them, the shift has been stark. 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-square foot two-bedroom apartment costs ₹30,000-₹40,000, reflecting a sharp post-pandemic surge, driven by return-to-office mandates and growing demand near the Information Technology Corridor. In five years, she shifted four houses in localities such as Perungudi and Thoraipakkam, owing to various factors, including dust and water scarcity.

Locality matters

Nearly 49% of the households in Chennai still depend on rental accommodation, according to data compiled for drafting Tamil Nadu’s housing and habitat policy. Finding homes near reputed schools is difficult because of high rents, with two-bedroom apartments costing ₹38,000-₹40,000, excluding maintenance charges that could go up to ₹7,000 in various south Chennai localities, say residents.

For many, moving into the city is tough. In Adyar, the monthly rent for a 1,800 square-foot three-BHK flat starts at ₹1.2 lakh and a 1,900 square-foot apartment in T. Nagar around ₹75,000. In premium neighbourhoods such as Abhiramapuram, rents can go up to ₹75,000 for a two-bedroom unit. The pressure of rising rents cuts across economic sections. Saravanan, an autorickshaw driver, said the rent for an unfurnished 300 square-foot one-BHK flat at Alamelu Manga Puram, Mylapore, is ₹10,000. Many IT professionals who share accommodation find it manageable. But families with additional expenses are under strain. While some flats are available on lease, they are priced around ₹10 lakh for a one-BHK flat for three years in areas like Mylapore and Abhiramapuram, putting them out of reach for daily wage earners.

The demand for rental housing in core areas remains strong. In a 500-unit apartment complex near Govindasamy Nagar, R.A. Puram, most flats were rented out within seven months of construction. “A 550-square-foot flat here rents for ₹35,000. People are willing to pay for location, water supply, and transport facilities,” Mr. Saravanan added. Post-pandemic rebound is also a key factor. Anna Nagar Sixth Avenue resident D. Karthikeyan said the rent for his old 2.5-BHK apartment has increased from ₹18,000 before the pandemic to ₹23,000 now. Another Anna Nagar resident, L. Jayaseelan, said a new 2-BHK apartment rents for about ₹60,000. Corporate tenants and commercial users have also pushed up prices.

Metro Rail impact

Infrastructure improvements have further influenced rental trends. In north Chennai, Metro Rail connectivity has pushed up rentals, especially between Tondiarpet and Wimco Nagar. Residents noted that the monthly rent has gone up by a minimum of ₹5,000 in areas such as Royapuram and Tondiarpet. Pointing to the gap between demand and availability of rental homes, residents suggested that increasing floor space index (FSI) on a par with other cities could improve housing supply and ease rental pressure.

Even in the suburbs, residents face costly rental rates. In Porur, a three-BHK house of 1,500 square feet is rented out for a minimum of ₹55,000. In Madhavaram, rents have nearly doubled in six years to ₹25,000. J. Ravi of Madhavaram said, “The renovated bus terminus, better outstation public transport, a rich groundwater table, and road access to other areas have attracted more settlers. But high maintenance costs are making it less lucrative for houseowners.”

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

Officials of the Greater Chennai Corporation (GCC) said rising property taxes have contributed to higher rental values. 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 rise

Landlords noted that it is also largely market-driven. Krishnamurthy, who owns three houses at T. Nagar, said there is no fixed parameter. “A Metro Rail line coming up close to my house would improve accessibility for tenants. New apartments in the area command around ₹35,000 for a two-BHK house. I have increased the rent for my properties as well.”

Another landlord at Saidapet attributed the rise to higher incomes. “Earlier, earning capacity was lower. Now, many people earn more. So, rent increases are seen as justified,” he said.

Market estimates also broadly reflect this trend. Saurabh Garg, co-founder and Chief Business Officer, NoBroker, a real estate platform, said rents in Chennai are 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 in the middle of the pack among major Indian cities. Mumbai leads with the steepest surge, at 19%, followed by Bangalore at 13%. Pune comes in at 10%, Delhi at 8%, and Hyderabad at 7%.

According to data collated by NoBroker, most premium listings are unfurnished (55%-81%), signalling that Chennai tenants in top localities choose to furnish homes themselves. Kanathur stands out as an outlier, with large houses averaging 1,159 square feet having a 31% furnished share, reflecting the gated community culture along the Old Mahabalipuram Road. “Several signals point to continued but uneven rental growth in the year ahead. Suburban acceleration will continue. Localities such as Medavakkam, Madambakkam, Kolapakkam, and Mogappair East have seen a 20%-35% jump. As new projects get occupied and as Metro Rail connectivity improves, these corridors are likely to see similar growth,” he said.

Near-flat growth

Premium localities may be plateaued. “Areas such as Adyar (+1.1%), Velachery (+3.1%), and Mylapore (+4.9%) are showing single-digit or near-flat growth, suggesting that they have hit a rent ceiling for their tenant profile,” Mr. Garg said. Pointing out that OMR/IT Corridor demand has stayed strong, he said Perungudi (+17.5%), Sholinganallur (+7.1%), and Thoraipakkam (+7.3%) continue to benefit from IT hiring and expansion of the Chennai Corporation. Overall, a city-wide increase of 8%-11% is a reasonable expectation. “Chennai is unlikely to see Mumbai-style spikes but will remain on a steady upward trajectory.”

Independent real estate brokers noted that rents have risen between 20% and 30% since the pandemic. The increase is also partly due to a gap between demand and available rental homes. The sharpest increases have been along the IT Corridor and fast-growing suburban belts such as Sholinganallur and Tambaram. Real estate broker R. Ganesan said a key factor pushing up rents in select areas in the city is the Metro Rail expansion. It is already reflected in areas along new corridors such as Porur, Poonamallee High Road, Madhavaram, and parts of north Chennai.

Another broker, Manohar, who operates in the Velachery-Medavakkam belt, said tenant preferences have also changed after the pandemic. “People now want apartments with security, facilities, and easy access to office areas, and they are ready 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 steep hike in parts of Chennai, A. Balasubramani, founder-president of CMDA/DTCP Registered Engineers Welfare Association, said rentals that stagnated between 2020 and 2022 owing to the pandemic were revalued. This correction led to a nearly 30% increase in rents in pockets of luxury neighbourhoods, as the usual annual escalation of 10% was not implemented by landlords during the pandemic.

He pointed out that over 25% of houses rented by professionals fell vacant during the pandemic, as they left for their native places. With the revival of economic activity, rental demand surged, and many localities in the Chennai Metropolitan Area have witnessed residential rent increases of over 30% in 2026, compared with pre-COVID levels. Commercial assets in select locations have registered a steeper increase of 40%.

While there is a sustained housing demand driven by expanding employment ecosystem, supply expansion is strained by strict planning norms, particularly FSI limits that restrict vertical development in the city, unlike in other cities such as Mumbai, Bengaluru, and Hyderabad. A calibrated relaxation of FSI norms could help unlock additional supply, said Ashyanth Ramasamy of KG Realtors, a firm 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-generating real estate, such as office buildings or rental housing, and allow people to invest. This could deepen institutional participation in real estate, he added.

Government buildings

Meanwhile, in the public sector, the Public Works Department fixes rent for government buildings, including government quarters, under the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960. Rents for such properties are typically revised by 10% annually, with the department overseeing assessment and collection through its rent cell. Sources in the PWD said the department also collects rent from private individuals occupying government-leased buildings. However, its role in private rental markets remains limited, and the PWD intervenes only when disputes related to private buildings go to court and calculates rent to resolve the issues.

The 1960 Act has largely been 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, to be filed with the rent authority under the Housing and Urban Development Department. Compliance remains weak, with many tenancy agreements not formally registered online. This points to a broader regulatory gap in the private rental housing segment, marked by sluggish 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 registration to bring accountability to Chennai’s rental market.

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