Delhi’s landlords undeterred by demonetisation

Delhi’s landlords undeterred by demonetisation

By ANANDO BHAKTO | New Delhi | 26 November, 2016
Demonetisation, landlords, national capital region, ATM, foreign exchange
In most cases they are refusing to accept rents by cheques or through online transactions or direct cash deposits.

Delhi’s landlords are undeterred by the Centre’s demonetisation and are continuing to accept rents in cash, an investigation done by this newspaper in national capital region’s (NCR’s) different localities revealed. In most cases, the landlords forced their tenants to take back the old notes and bring new ones, notwithstanding the long queues at the banks. The lessors refused to accept payment in cheque or through online or direct cash deposit.

“My landlord said no matter what, I have to pay him the month’s rent in cash. I hadn’t paid the rent when the Centre’s decision was announced. And with a Rs 2,500 cap on ATM withdrawals and Rs 10,000 cap on bank withdrawals, besides the chaotic crowds of people on bank premises, I requested him to accept the payment through online transfer, but he refused. He said payment would have to be made in cash, in the new Rs 500 and Rs 2,000 notes. He was totally uncompromising, though he gave me a few days’ time,” said Sumit (name changed on request), who lives in Mayur Vihar Phase I.

In Saket, a group of three boys in their early 20s, who live in Neb Sarai, said all of them took turns to withdraw money from ATMs and bank to gather Rs 18,000 which they had to pay in cash to their landlord. “My landlord never gives us any receipt despite taking Rs 18,000 per month, which is, on an annual basis, clearly beyond the non-taxable limit. We thought with demonetisation, these people will mend their ways, but that does not seem to be happening,” said Ravi, without agreeing to let his real name be published or revealing the name of the landlord.

Experts believe despite the Centre’s crackdown on black money holders, landlords will be able to siphon off their monthly rental yields in different ways, but in various small amounts, so as to avoid detection. Foreign exchange, buying gold, equities and other shares are the possible escape routes. There is also a general belief that they would have been anyway investing the amounts accrued through rents in real estate or other areas, and so it is very less likely that they would have landed in a position where they had millions of rupees stashed under their mattresses without knowing what to do with the now-illegalised notes of Rs 500 and Rs 1,000.

“The problem is with the November’s rent. By the 8th, most of them had collected the rents from their tenants but they may not have ‘utilised’ or ‘channelled’ it. But here again, they had the upper hand. They are forcing us to take back the old notes and pay them in fresh ones. I had paid rent to my landlord on 6th, two days before the demonetisation announcement. He promptly returned me the money the very moment he heard about the Centre’s initiative, on the night of 8th itself,” said Naveen, a resident of Vasundhara in Ghaziabad.

In Munirka, an independent journalist who has previously worked with a reputed English daily, said  a landlord is a landlord and you just have to fall in line if he refuses to accept the rent in cash. “My case was different though. He agreed to take the rent in cheque. That is because he has small businesses, and it is easy for him to establish his money as accounted, which he must be doing by adjusting the transactions related to his other businesses,” the journalist said.

He, however, gave a sorry idea about the general situation in Munrika, which is a hub of students and young professionals, pointing out how landlords have been targeting their lessees. “I know at least three students and young employees, all in the age bracket of 20-22 years, who have been arm twisted by their landlords to take back the rent paid in old notes and bring in new notes. In one case, a landlord also gave his tenant, a young student, to exchange Rs 4,000 in addition to paying him rent in the new currency denominations. The young students have no other options where they can rent places this cheap; Munrika is also a prime location. So, they cannot afford to take on the lessors,” he explained.

Most tenants believe that the landlords are going to adopt a wait-and-watch policy, before finding out new ways to siphon off their cash, which in most cases is in six-digits per month. “Easily. My landlords has at least half a dozen tenants. And he takes Rs 16,000-Rs 22,000 from each one of them, so he is definitely earning more than Rs 1 lakh per month,” said Ravi.

He added: “Earlier they must have been using money in bulk in real estate. Now that it will not be possible, for fear of being detected, they may be using this in small parts and invest in different finance schemes or buy foreign exchange.”

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