How a 5% yearly rent increase adds up over a five-year lease

Indian leases almost always carry an annual escalation. A rent that looks fixed at signing is a rising number by year five, and the total over the term is what you are really agreeing to.

Take a starting rent of ₹25,000 a month with a 5% annual increase over 5 years. By the final year the monthly rent is ₹30,388, which is 21.6% higher. The average monthly rent over the term is ₹27,628, and the total rent paid is ₹16,57,689.

Add a security deposit of ₹3,00,000 and the total commitment is ₹19,57,689.

Landlords can use the same arithmetic to project income, and tenants to compare an offer with a higher starting rent but no escalation. Run your own numbers in the rent escalation calculator.