Why Bengaluru is facing a paying guest housing crisis

Bengaluru is experiencing an unexpected housing shortage, not in gated communities or high-rise buildings, but rather in the affordable paying guest (PG) accommodations that have long provided for the city's huge migrant workforce.

Students and young professionals are in a difficult situation as hundreds of PG accommodations are being forced to close due to a combination of new government regulations, growing expenses, and declining demand.

Stricter regulations

Under Section 305 of the BBMP Act 2020, the Bruhat Bengaluru Mahanagara Palike (BBMP) has imposed stricter regulations for PG operators. These include building road width requirements, mandatory CCTV in common areas, fire safety clearances, and a minimum space requirement of 70 square feet per resident. PG housings can only operate lawfully on roads that are more than 40 feet wide. FSSAI registration is required if food is served.

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Accommodations that do not fit the requirements are being shut down as enforcement steps up. In the last few weeks, more than 100 PG kitchens have been sealed in the Mahadevapura zone alone.

Growing operating expenses

In addition to regulation, PG operators have to deal with growing municipal taxes, water fees, and commercial electricity bills. Since most residents, particularly students and those in their early careers, are extremely cost-sensitive, many are unable to raise rent any further. Many operators have suffered financial losses of 20 to 30 per cent as a result, according to property analytics company Zapkey.

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Declining demand

Due to widespread layoffs in the IT sector, the once-booming PG market is currently experiencing decreased demand. Occupancy rates have decreased as fewer tech workers have moved to Bengaluru. In the past year, a number of PG owners in Whitefield and Marathahalli have reported losing up to 25 per cent of their tenants.

On the other hand, due to the quick disappearance of PG housings, many young professionals and students are being compelled to move into more expensive rental apartments or search for shared apartments, which causes additional financial and other kinds of pressure.

Low compliance levels

Only about 2,500 of Bengaluru's 12,000 PG accommodations are officially registered with the BBMP. This implies that the majority of these housings run the risk of an unexpected inspection and closure. Particularly in older buildings, operators claim that the new standards are extremely strict for small-budget services to adhere to.