India’s residential rental market has been informal for long, leading to an imbalance in power between landlords and tenants. For decades, opaque or non-existent rent agreements, cash payments, weak documentation, and inadequate legal clarity have led to friction among the parties. Both landlords and tenants have borne the brunt of this in multiple cases, as they have often found themselves stuck in a legal quagmire. That equation, however, is now changing.
In the past five years, the market has evolved at a faster rate than it did in the previous 15 years. Urbanisation, workforce mobility, and the need for flexibility have together created a surge in the pool of tenants in cities such as Delhi, Mumbai, Bengaluru, Hyderabad, Pune, and Chennai. At the same time, maintenance costs have risen, compelling landlords to rethink their tenancy attraction and retention strategies. In 2025, the ecosystem has also witnessed a major shift towards rental formalisation, and 2026 is set to consolidate these gains.
At the core of the market’s transformation has been digitalisation. India’s UPI recorded over 19 billion transactions valued at INR 24.58 lakh crores in November 2025. This shows how deeply digital payments have become embedded in everyday financial behaviour. Such a nationwide shift has certainly impacted the rental market as well. A system that was formerly cash-driven, has now embraced tech-led payment frameworks, thus bringing structure and accountability to transactions. Digital rent payments have made rent collection easier, reduced friction, and provided digital receipts of payments. This means that landlords can put in less effort to chase rent, while tenants enjoy convenience and security.
This wave has made rental relationships transparent. Automated receipts, digital agreements, and structured payment histories have reduced disputes and added a layer of trust. Most crucially, fintech innovation has turned rent into more than a monthly expense. Rental scoring platforms have turned rent into a credit metric by building a score on the basis of timely and consistent rent payments which is then shared with banks, financial institutions and credit bureaus as an additional metric to consider for credit disbursement.
The implications of this development are of note. For young professionals and first-time renters, rent payments now serve as evidence of financial discipline. By 2026, this emerging ‘rental identity’ will work as a digital rental passport, helping tenants secure better housing and access to a wider set of financial products.
Landlords, too, stand to gain from this innovation. Access to verified tenant profiles, insight into rental histories, and standardised documentation reduces risk and vacancy periods. Instead of chasing the highest possible rent, landlords can now prioritise tenant quality, stability, and long-term occupancy. This strategy means better understanding of returns, where steady income and lower churn outweigh steep rental values.
The ecosystem’s maturation is also impacting tenant strategy. Renters have become more discerning; they now value well-maintained homes and transparent rental agreements. As competition intensifies, mainly in prime urban micro-markets, tenant experience will play a crucial role in retention. Consequently, landlords who invest in operational efficiency and trust-building in 2026 are going to command consistent loyalty.
In a nutshell, India’s rental ecosystem is at the intersection of technology, finance, and changing social expectations. While challenges pertaining to digital literacy and legacy cash preferences persist, they are gradually phasing out. The change in rental rules in states like Maharashtra and Karnataka will lead to a transformational future for the residential rental sector. In 2026, renting is all set to be more formalised, financially inclusive, and strategically well-balanced, marking a shift from survival-led tenancy to structured participation for both landlords and tenants.
Authored By;
Sarika Shetty CEO and Co-Founder of RentenPe. She is a tech-enabled market disruptor app which is building India’s first Rent Credit Score (R Score™) and Residence Card (R Card™), aimed at formalizing the residential rental market and promoting financial inclusion through rental data.
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