Over 200 PGs Shut in Bengaluru Amid Tightened Norms, Sector Faces 30% Losses

Bengaluru’s earlier flourishing paying guest (PG) accommodation business is in a fix, with more than 200 units closed down and owners citing losses of 20–30%, after a regulatory drive by the Bruhat Bengaluru Mahanagara Palike (BBMP).

The city boasts more than 12,000 PGs, but merely 2,500 are BBMP-certified, according to Sukhi Seo, secretary of the Bengaluru PG Owners’ Association. “Over 10,000 PGs still operate without approvals. Owners fear surprise raids, and many are reconsidering their investments,” she said.

The decline began last year after the BBMP imposed stricter rules under Section 305 of the BBMP Act, 2020. These include mandatory CCTV coverage at all access points and common areas, a minimum of 70 square feet of space per occupant, and a daily water supply of 135 litres per resident. PGs that serve food must also obtain an FSSAI license within three months of securing a trade license.

In April, BBMP officials closed kitchens in around 100 PGs in Mahadevapura for breaching zoning and licensing norms. Many PGs were found operating in areas not zoned for commercial activity, especially on roads less than 40 feet wide.

“PGs used to yield 6–8% ROI double that of regular rentals in Bengaluru,” said Kiran Kumar, VP at Hanu Reddy Realty. “Now, rents above ₹10,000 for double sharing are no longer viable. Utility charges, water tariffs, and commercial taxes are squeezing margins.”

Seo added, “We can’t raise rents anymore. Tenants leave. Costs are rising, but income is stagnant.”

Civic experts say the sector’s unregulated growth has worsened infrastructure pressure. “Many PGs violate building codes, skip fire safety norms, and overcrowd residential zones,” said Sandeep Anirudhan of the Coalition for Water Security. “The government must act decisively to restore order.”

As enforcement tightens and profitability declines, Bengaluru’s PG sector, once a lucrative real estate bet, is now grappling with deep uncertainty.