On the third house tour of the day, the Chennai heat settled in and so did the realization for S. Vasanth – his budget was no longer viable and the city’s main neighborhoods were out of bounds. In Chennai, what starts as a routine house hunt turns into a compromise for tenants like him. A slightly smaller house, a longer commute, and a bigger budget aren’t part of the plan, but they are necessary compromises.
In recent years, the experience of renting a house has changed and sometimes become an exhausting affair. Chennai’s rental market is heating up and tenants are feeling the squeeze. With rents estimated to grow at 11-14% per annum, even smaller houses come with an annual increase of ₹1,500-2,000, raising concerns about affordability.
Jayanthi and her husband moved to the city from Pollachi to settle into their new jobs. For them, the shift was significant. About six years ago, a couple rented a three-room flat 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, reflecting the post-pandemic surge driven by the back-to-office mandate and rising demand near the IT corridor. She relocated four houses in localities such as Perungudi and Thoraipakkam in five years due to various factors including lack of dust and water.
The location matters
Nearly 49% of households in Chennai still depend on rented accommodation, according to data compiled for the Tamil Nadu Housing and Habitat Policy Draft. Finding houses near reputed schools is difficult due to high rents, with two-bedroom flats costing ₹38,000-40,000, excluding maintenance charges, which could go up to ₹7,000 in various locations in south Chennai, residents say.
For many, moving to the city is difficult. In Adyar, the monthly rent for a 1,800 sq ft three-BHK flat starts at ₹ 1.2 lakh and for a 1,900 sq ft flat in T. Nagar around ₹ 75,000. In premium neighborhoods like Abhirapuram, 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 sq ft one BHK flat in Alamelu Manga Puram, Mylapore is ₹10,000. Many IT professionals who share accommodation find this manageable. But families with additional expenses are under pressure. While some apartments are available on rent, they cost around ₹ 10 lakh for a one BHK apartment for three years in areas like Mylapore and Abhirapuram, putting them out of reach for daily wage earners.
Demand for rental housing in key areas remains strong. In a 500-unit apartment complex near Govindasamy Nagar, RA Puram, most of the flats were rented out within seven months of construction. “A 550 sq ft flat here rents for ₹35,000. People are willing to pay for the location, water supply and transport facilities,” Saravanan added. The post-pandemic recovery is also a key factor. Anna Nagar, Sixth Avenue resident D. Karthikeyan said the rent for his old 2.5 BHK flat has increased from ₹ 18,000 before the pandemic to ₹ 23,000 now. Another resident of Anna Nagar, L. Jayaseelan, said a new 2-BHK flat rents for around ₹60,000. Corporate tenants and commercial users also saw price increases.
Metro rail impact
Improvements in infrastructure further influenced rental trends. In north Chennai, Metro Rail connectivity has boosted rents, especially between Tondiarpet and Wimco Nagar. Residents noted that the monthly rent has gone up by at least ₹5,000 in areas like Royapuram and Tondiarpet. Pointing to the gap between demand and availability of rental houses, residents suggested that raising the Floor Area Index (FSI) to the same level as in other cities could improve housing supply and ease pressure on rents.
Even in the suburbs, residents are struggling with expensive rents. In Porur, a three BHK house measuring 1500 sq ft is on rent for a minimum of ₹ 55,000. In Madhavaram, the rent has almost doubled to ₹25,000 in six years. J. Ravi of Madhavaram said, “Renovated bus terminus, better pre-station public transport, abundant water table 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 are often met with resistance. Many prefer gated communities for security and amenities such as elevators and parking. However, high demand and limited availability make availability at affordable prices difficult.
Greater Chennai Corporation (GCC) officials said rising property taxes have contributed to higher rental values. The GCC’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 its water and sewerage charges.
Market driven rise
Landlords noted that this is also largely market driven. Krishnamurthy, who owns three houses in T. Nagar, said there is no fixed parameter. “A metro line that runs close to my house would improve accessibility for tenants. New flats in this area are around ₹ 35,000 for a two-BHK house. I have increased the rent for my properties as well.”
Another landlord in Saidapet attributed the increase to higher incomes. “Earlier the earning capacity was less. Now many people are earning more. So the rent increase is considered justified,” he said.
Market estimates also roughly reflect this trend. Saurabh Garg, co-founder and chief commercial officer, NoBroker, a real estate platform, said rents in Chennai are rising in line with income growth, making Chennai one of the most balanced and tenant-friendly rental markets among Indian cities. Chennai’s annual rental market growth of 11% placed it in the middle of the group of large Indian cities. Mumbai leads with the steepest increase at 19%, followed by Bangalore at 13%. Pune has 10%, Delhi 8% and Hyderabad 7%.
According to data collected by NoBroker, the majority of premium listings are unfurnished (55%-81%), signaling that Chennai tenants in prime locations are opting to furnish their homes themselves. Kanathur stands out as an outlier with large houses averaging 1,159 sq. ft. that have a 31% furnished share, reflecting the gated community culture along Old Mahabalipuram Road. “Several signals point to continued but uneven rental growth in the coming year. The suburban acceleration will continue. Localities like Medavakkam, Madambakkam, Kolapakkam and Mogappair East have seen a jump of 20% to 35%. As new projects are taken up and Metro Rail connectivity improves, these corridors are likely to see similar growth,” he said.
Almost flat growth
Premium locations can be upland. “Areas such as Adyar (+1.1%), Velachery (+3.1%) and Mylapore (+4.9%) are showing single-digit or near-flat growth, indicating that they have reached the rental ceiling for their tenant profile,” Mr. Garg said. Emphasizing that demand in the OMR/IT corridors remained strong, he said Perungudi (+17.5%), Sholinganallur (+7.1%) and Thoraipakkam (+7.3%) continued to benefit from Chennai Corporation’s IT hiring and expansion. Overall, a city-wide increase of 8-11% can be expected. “Chennai is unlikely to see Mumbai-style spikes, but will remain on a steady upward trajectory.”
Independent estate agents have noted that rents have risen by 20 to 30% since the pandemic. The increase is also partly due to the gap between demand and available rental homes. The sharpest increases were along the IT corridor and fast-growing suburban belts like Sholinganallur and Tambaram. Realtor R. Ganesan said the key factor pushing up rents in select areas in the city is the Metro Rail expansion. This is already reflected in areas along the 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 post-pandemic. “People now want apartments with security, amenities and easy access to office space and are prepared to pay more,” he said. Landlords are also increasingly picky. “Landlords prefer tenants with stable jobs and many quote higher rents because they know people can pay,” he said.
A. Balasubramani, founder and president of the CMDA/DTCP Registered Engineers Welfare Association, explained the reasons for the steep rise in parts of Chennai, saying that rents, which had stagnated between 2020 and 2022 due to the pandemic, were overvalued. This correction led to a nearly 30% increase in rents in pockets of luxury neighborhoods, as the usual 10% annual escalation was not made by landlords during the pandemic.
He pointed out that over 25% of homes rented by professionals became vacant during the pandemic when they left for their hometowns. With the recovery in economic activity, rental demand has increased, with many locations in the Chennai metropolitan area seeing rents increase by more than 30% in 2026 compared to pre-Covid levels. Commercial assets in selected locations saw a steeper increase of 40%.
While there is a sustained demand for housing driven by an expanding employment ecosystem, supply expansion is constrained by strict planning norms, particularly FSI limits, which limit vertical development in the city, unlike other cities such as Mumbai, Bengaluru and Hyderabad. A calibrated relaxation of FSI norms could help unleash more supplies, said Ashyanth Ramasamy of KG Realtors, a firm involved in multi-level housing projects across the city.
Tamil Nadu has the potential to develop real estate investment trusts, entities that own and manage income-generating properties 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 Department of Public Works fixes rents for government buildings, including government quarters, under the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960. Rents for such properties are usually revised by 10% annually, with the department overseeing assessment and collection through its rent cell. Sources in the PWD said the department is also collecting rent from private individuals occupying government-leased buildings. However, its role in private rental markets remains limited, with OZP only stepping in when disputes involving private buildings go to court and calculating rents to resolve issues.
The 1960 Act has been largely replaced by the Tamil Nadu Landlord and Tenant Rights and Responsibilities Act, 2017. The Act contains provisions including a mandatory written tenancy agreement to be filed with the Tenancy Authority under the Department of Housing and Urban Development. Compliance remains weak, with many leases not formally registered online. This points to a wider regulatory gap in the private rental housing segment, characterized by slow enforcement of the law and lack of compliance at the grassroots level.
Experts have called for stronger enforcement through regular audits and even surprise rent registration checks to hold Chennai’s rental market accountable.
(With contributions from Sangeetha Kandavel, R. Aishwaryaa, Aloysius Xavier Lopez and Geetha Srimathi.)
