← back to homepage

Unseen Crisis: How the Lockdown and Migrant Exodus Affected Small-Landlords in India

By Fazil Khan

Oct. 31, 2020

To-let pamphlets posted on the shutter of a local shop.

In the narrow serpentine lanes of Naraina Village in southwest Delhi, Vipin Tanwar manages his stationery shop ten hours a day, seven days a week.

On a recent evening at his shop, he got up to pick up a notebook from a dimly-lit corner, blew off a thin veil of dust and passed it on to a customer, all the while constantly peeking at his phone. When it rang, he reached out in haste to take the call, listened for a few seconds and, with a disappointed look in his eyes, put the phone back.

It was not what he was hoping for.

For months now, the 45-year-old small businessman and landlord has been waiting for a response to a pamphlet he pasted in front of his shop, calling for tenants for two rental units lying vacant at his house. Just four years ago, he had drawn from his father’s savings to build the rooms as an extension to his own home hoping to boost income and save for his family’s future.

But those aspirations were crushed when his tenants, both migrant laborers, vacated the rooms earlier this year to return to their hometowns after losing their jobs due to the pandemic and the state-imposed lockdown. He has not been able to find a replacement since then.

“My brain went numb for a moment,” said Tanwar recalling what he felt when the tenants told him they were leaving. “Survival was the only thing on my mind”.

Rendered jobless due to one of the world’s strictest COVID lockdowns, millions of migrants in India left cities to move back to their home villages in remote parts of the nation, prompting the largest exodus since the country’s partition in 1947. The plight of tenants in India and around the world in the face of the pandemic has become well known. But in India, the crisis has had another, scarcely remarked class of victims, in many thousands of small-scale urban landlords like Tanwar who suddenly found their rental units vacated, all within the space of a few weeks.

In most cases, landlords have found themselves cornered, almost as helpless as their erstwhile tenants. Not only did their rental income dry out, but their primary source of livelihood, if they had any, was affected just as any other business or job during the lockdown. Those who had monthly repayment commitments on their loans, taken for a variety of purposes including an expansion of rental business, found themselves scraping hard to avoid defaults. So, they borrowed from friends and relatives or, in a majority of instances, burned through their savings to try and make it through the crisis.

The official response to the crisis has not helped either. Several state governments across the country came forward to help tenants during the economic meltdown, issuing guidelines ordering landlords to let go of the rent for at least three months. Although hailed by many as a positive step, the decision came down hard on landlords who depended heavily on rental income for their own survival. Moreover, no support was provided by the government to cushion the losses that it asked these landlords to incur.

Most of these landlords, in fact, are not much better off than tenants. According to an Asian Development Bank report, nearly 80 percent of the available rental units in the country are owned by small landlords. These landlords live in close proximity with their tenants, more often than not, in the same building.

“Small landlords are reeling with the loss of income from rentals,” said Mukta Naik, an urban planner and fellow at the Center for Policy Research, New Delhi. “Bigger landlords whose households rely on multiple sources of income had enough to get by during these times. But landlords from more modest backgrounds are borrowing money to survive this period.”

Rental housing accounts for nearly a third of the entire housing market in India, according to official estimates. As India witnessed a financial boom in the wake of economic reforms of the early 90s, millions moved from predominantly rural areas to cities in search of better employment opportunities. The numbers swelled rapidly over time — the estimated annual flow of internal migrants reached nine million between 2011–2016 compared with about six million a year between 2001–2011 — and so did the demand for living spaces.

In the face of a massive influx of migrants into urban areas, the state found itself unprepared to accommodate them all, experts say. Instead, the locals saw an opportunity and stepped in to bridge the gap by providing affordable living spaces for these mostly poor migrant workers, supplementing their own income in the process. These rentals were often created by utilizing additional space within their own homes. At present, these informal rentals account for a majority of the total rental housing in India.

“In Delhi, while having extreme control over land, the Delhi Development Authority’s pace of building housing was completely out of sync with the pace of the growth of the city over decades,” Naik said. “It did not build as many houses for the poor as it built for middle-income and rich people. In an infrastructure development scenario that remains fragmented these informal landlords provide a little bit of glue that binds the cities together.”

In Naraina Village, Tanwar’s shop, his only source of livelihood after losing rental income, remained closed for at least two months when the neighborhood was marked as a ‘containment zone’ due to a substantial rise in coronavirus infections.

“I had to borrow from friends and relatives to make ends meet. Personally, I had little funds to fall back on,” he said. Tanwar was not the only landlord to suffer a double blow during the lockdown.

Vikas Kumar, 45, works in the private sector as a salaried employee and owns a small house where he lives with his wife and a son. To put additional space to use and bring home some extra income, Kumar rented out three rooms he had within his premises.

Before the lockdown, one of his rooms was already vacant and he was looking for a replacement. As the repercussions of the pandemic became apparent, another tenant left causing further concern. The tenant who remained, saw his salary cut by 50 percent and, therefore, Kumar had to defer their rent for a couple of months too. Adding to his misery, Kumar himself received a salary cut from his employer.

“Tenants left in large numbers during the lockdown which was a huge setback for people like us,” Kumar said. “Many of my relatives who were similarly dependent on rent faced a lot of difficulties in running their household.” Since many of them had come to depend almost entirely on rental income, the loss of it made it difficult to even incur daily expenses unless they had savings. Those who didn’t, had to borrow.

In an adjacent street, immersed in an online game on his smartphone, Shubham Tanwar [unrelated to Vipin Tanwar], a young guy in his early 20s, sat at his father’s footwear store. The shop is situated on the ground floor of the house his family owns where they also have two additional rooms available to rent out. His father runs another small business in a neighborhood on the outskirts of the city.

A pamphlet for a vacant room hung in front of the shop, rotating with every gentle stroke of wind. Shubham said that one of their rooms was vacated during the lockdown and no new tenant has arrived yet.

“Our shop and business were also badly affected and because of that, the lost rent made things harder for us,” Shubham said. “People are mostly staying home, no one needs shoes right now.” He said that ever since they have reopened the shop after months of closure during the initial outbreak, not even a single customer walks in the store on most days. “On some days, if we’re lucky, we’re able to sell something and make $4–5 just minutes before we’re about to close the shop,” Shubham said.

This class of landlords, often called ‘subsistence’ or what Swastik Harish, a researcher at the Indian Institute for Human Settlements (IIHS), Bangalore, calls ‘per chance’ landlords, which basically means someone who is not a commercial landlord but who let out his additional space to support his family income, faced the most severe consequences of the lockdown and migrant exodus.

“There are many small landlords,” said Harish. “If there are 21 million rental units [in the country], there must be 20 million small landlords or at least 18 million small landlords. That’s my sense but there’s no data on this.”

Even some better-off landlords have faced difficult adjustments. Anil Kumar [unrelated to Vikas Kumar], 45, whose family has a relatively more commercialized rental setup in terms of the number of rental units they have (30), found more than half of them vacant during the lockdown. “They got scared of the whole situation,” Kumar told this reporter over a phone call. “I promised to waive their rents off for two months but they still left.” His units remained vacant at the time of writing this report.

Jointly owned with his brother and built on the land they inherited from their forefathers, the rented units, when fully occupied, accounted for more than half of the total household income every month.

But a majority of the tenants vacated their rooms in May and their primary business too, shut down after employees, who were also migrants, left as well. In addition to this, Kumar has two monthly loan repayment commitments and has nearly exhausted his savings to avoid defaults on them.

Kumar did not have agreements or deposits with any of his tenants, a safeguard that he could have used when the tenants suddenly decided to leave.

“How can a daily-wage laborer, who hardly makes enough to pay their rent, make a deposit?” said Kumar.

Involving poor and middle-class people, the landlord-tenant arrangement in the informal sector works on goodwill and mutual understanding, that is, verbal contracts instead of legal agreements. An official survey, in 2012, found that more than three-fourths of the households living in rental accommodations in India had no written contracts.

While this essentially allows the urban poor the flexibility to move freely between places when they switch jobs, it also creates uncertainty for both the tenant as well as the landlord.

So, when the crisis hit, the existing arrangement impacted both sets of people. With no legal safety net and deposits in place, the tenants who got evicted were left homeless overnight. Likewise, the landlords had nothing to fall back on when their tenants decided to vacate the dwelling at a short notice.

However, Harish said that even if there had been a rent agreement, it would not have made much of a difference for these people. “It doesn’t matter if I have a rental agreement because the rental agreement, honestly, is just one piece of paper. It has no validity in a court of law,” he said, adding that only registered rent agreements hold any ground in terms of legality and the share of such agreements in the market is almost negligible.

Jai Singh, 70, was luckier. While his tenants, too, vacated all the rental units he had, he did not suffer a great deal, he said, as his sons supported him. Singh was also more optimistic of a recovery than many other landlords.

“Even though there is hardly any demand right now, people will come back in 5–6 months I think,” Singh said.

But it may not be as straightforward. Although migrants are willing to come back to cities, as recent surveys show, due to fewer employment opportunities in the villages and even if at a risk of contracting the disease, a complete return to normalcy for small landlords still seems distant.

Experts believe that the recovery will be spatially variable and will depend on the kinds of tenants particular landlords attract and the industries they work in. They compare the current crisis to the disruption caused by the demonetization of high-value currency notes in 2016 that led to a liquidity crunch in the economy. However, the risk perception of the disease is another major factor that would dictate the pace of the recovery this time.

For Tanwar, as schools in Delhi remain closed since March, customer footfall is scarce ever since he was allowed to open the shop after restrictions were eased a couple of months ago. He had come to almost entirely depend on rental income over the past few years as the shop business remained tepid.

“Right now, it seems like I just pass my time sitting here all day,” said Tanwar, uncertain of any relief in the near future. “Only God knows when things will get back to normal, if at all they do.”