Bengaluru’s hot rental market sees a rise in upfront ‘token money’ as apartments get snapped up within hours

The rental housing market in Bengaluru has become increasingly competitive, leading to a growing trend where prospective tenants pay upfront “token money” to secure apartments before signing formal rental agreements. This practice has gained momentum as demand for rental housing in the city has surged sharply in the post-pandemic period. With the return-to-office culture, expansion of the technology sector, and increased migration of professionals and students to the city, the availability of ready-to-move-in rental apartments has become limited. As a result, properties that are listed in the morning are sometimes finalized and booked by the evening. In such a high-pressure market, tenants are increasingly paying token amounts to landlords or brokers as a way to temporarily reserve the property and prevent it from being rented out to someone else. Typically, the token amount ranges between ₹10,000 and ₹20,000 for standard apartments, but in highly sought-after properties the amount can be significantly higher. In premium localities, the token money can even equal one month’s rent. For instance, in a high-end apartment in Defence Colony located within the popular neighborhood of Indiranagar, where the monthly rent was around ₹2.5 lakh, the prospective tenant was reportedly asked to pay the same amount as token money to secure the property. The rapid pace at which apartments are being snapped up reflects how intense the demand-supply imbalance has become in Bengaluru’s rental market.

Despite its growing popularity, token money in rental transactions does not have a clear legal framework in India. Even the Model Tenancy Act, 2021 does not contain specific provisions governing such advance payments, meaning the practice is largely based on trust and mutual understanding between landlords and tenants. Legal experts say the token amount is usually paid to ensure that the property remains reserved until the final rental agreement is signed and the tenant moves in. According to Vittal B R, the practice has become common because multiple tenants often show interest in the same property, prompting landlords to prioritize the person who confirms their interest through a token advance. Another legal expert, Akash Bantia, notes that since the law does not specifically regulate token advances, the terms of such payments depend entirely on what both parties agree upon. To minimize risks, experts recommend maintaining digital proof of payment through bank transfers or UPI transactions and obtaining a written acknowledgment from the landlord. A simple written note outlining the token amount, the terms of refund, and conditions for forfeiture can help avoid disputes later. Although brokers claim that nearly 90 percent of token advances are refunded if the deal falls through, disagreements can still occur if there is no documentation. Real estate brokers in Bengaluru say that the practice was relatively rare before the COVID-19 pandemic but has now become almost standard in the city’s fast-moving rental market. With demand continuing to outpace supply, especially in tech-driven neighborhoods and well-connected residential areas, experts believe this trend of paying token money is likely to persist. However, they also emphasize the need for more formalized and transparent systems to protect both tenants and landlords as Bengaluru’s rental housing market continues to grow and evolve.