Deposits are often quoted in months of rent. Deductions at move-out should be linked to damage beyond normal wear, which is why move-in and move-out inspections matter.
Example
Two rentals, two deposits
A 2 BHK in Whitefield, Bengaluru, rents at ₹35,000 a month, and the owner asks for six months as deposit: ₹2,10,000. Under the Model Tenancy Act, 2021 the cap for residential premises is two months’ rent — ₹70,000 — but it binds only in states that adopt it. At move-out, deductions should match damage recorded against the move-in inspection.
Figures are illustrative, not market rates.
Across India
- Bengaluru is known for higher residential deposits than most metros, often several months of rent.
- Mumbai and Pune rentals usually take a deposit alongside a registered leave and licence agreement.
- States that adopt the Model Tenancy Act, 2021 cap deposits at two months’ rent for homes and six months for non-residential premises.
Questions about Security deposit
Is there a legal cap on security deposits?
The Model Tenancy Act, 2021, issued by the Ministry of Housing and Urban Affairs, caps deposits at two months’ rent for residential and six months for non-residential premises. It applies only where a state has adopted it, so check your state’s rent law.
When must the deposit be returned?
The agreement should say. The Model Tenancy Act expects the deposit to be refunded when the tenant hands over vacant possession, after lawful deductions. Agreeing the refund date, the inspection process and permitted deductions in writing avoids most disputes.
What can an owner deduct from the deposit?
Unpaid rent and utility bills, and the cost of repairing damage beyond normal wear and tear. Repainting after years of normal living or replacing worn fittings is usually wear and tear. Dated move-in and move-out photos make each deduction easy to justify.
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