Things to keep in mind while renting out your property


  

If you are renting out a property for the first time, it can be a process that will bring with it a number of confusions and the fear that a tiny mistake can have serious repercussions if proper documentation isn’t in place. To make the process a bit easy and not so tiresome, we’ve listed out a few steps that you can take to safeguard your property while you rent it out.

Generally, when the property owners give out their property on rent, the dilemmas generally revolve around the amount of rent to be charged keeping the tenant’s ability to pay, verification tasks and registrations queries related to the lease agreement, lock-in period, security deposit, etc. Also, without due diligence, renting out a property can become a nightmare.

According to experts of the real estate industry, the most common problems that first-time landlords encounter after finding the right tenant for the property, are a delay in receiving rent, misuse of the property by the tenant, tenants refusing to vacate or denying to pay the maintenance fees (if the rental agreement requires them to).

Proper legal documentation is one of the basic and foremost important steps of renting out a property. In the absence of legal documentation, the owners expose themselves to risks such as violation of property by illegal means, unlawful activities owing to lapse in tenants’ background checks, and delay in the receipt of rent.



CALCULATION OF RENT AMOUNT
The experts suggest that the amount of rent is generally 0.8% to 1.1% of the property’s total value.
Other than this opinion by the experts, the location of the property and amenities being provided play a major role in determining the rental amount. For example, a property in an upmarket location will give you higher rentals, similarly, a fully furnished property will give you more rentals than a semi-furnished property. The rent may also be inclusive of the external charges, such as maintenance.

RENTAL AGREEMENT
The experts suggest that every rental agreement should be in writing and registered. It should specify the monthly rental amount, security deposit, and all the terms and conditions of the lease in detail. It should also mention who will pay for the utilities, water, and electricity, etc. The purpose of tenancy – whether the property is being used for residential or commercial purposes, should be clearly mentioned. Also, in case the rental agreement expires and the tenant and owner agree to extend the term of the lease, then, the extension should be in writing.

REGISTRATION OF THE LEASE AGREEMENT
Expert suggests that to make a lease agreement legally valid, one needs to register the document, under the Registration Act. According to the Transfer of Property Act, lease deeds that are made for a tenure of more than one year should be registered. Generally, the owners and landlords enter into a lease deed for 11 months with the option to renew it for another 11 months, if certain conditions are fulfilled. Such leases should also be properly stamped to avoid exploitation.


References: Media Reports, Economic Times, Press Releases




Disclaimer: This information has been collected through secondary research and Elite Landbase is not responsible for any errors in the same.

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