Hiring a
place may seem very simple for the Landlord, as
also the Tenant. Sometimes these become very unnerving if you miss out on some
important aspects that need to be considered before moving into the house /
letting out your house. Taking the paperwork lightly, may have serious implications
for both parties. Apart from checking out the exteriors and interiors, the
legal check on various aspects is equally essential. . Points to be considered:
Tenants.
·
Check
property ownership documents. Conveyance Deed is the best proof, however,
Electricity / Water / Gas Bills are also acceptable.
·
If
a Broker is involved, his registration should be checked.
·
Brokerage
to be paid to the broker varies from 15 days rental to 1 month in North India.
It could be more at places. Must negotiate it.
·
Brokerage
paid is part of expenses & you can use it for tax purposes.
·
You
must inspect the house and see the house in detail before finalizing. Bring out
the repairs required, like; toilet flushes, electricity points, modification
required for ACs, Doors & windows, etc.
·
Photograph
broken or dilapidated fixtures / fittings & exchange it on mail with owner
to avoid problems while handing back.
·
Major
& minor Repairs; major repairs due to fair wear-and-tear are done by the
owner. In case of negligence, cost is borne by the tenants. All minor repairs are
responsibility of the tenants.
·
You
must read through the RWA by laws of the society to avoid inconvenience /
regrets later.
·
Get
a clear idea about the amenities near / around the property, public transport,
neighborhood gentry, proximity to essential markets, schools, hospitals, etc.
·
Check
the safety aspects, especially for working / single women. You could get the crime
rate in the area on internet.
·
Find
out the age of the property. If possible, speak to the previous tenants or the
neighbours.
· For Fully furnished apartments, normally a Lock-in period is required, as
expenses are incurred on furnishing the house. Must check the deed in detail,
including the rent increase percentage after expiry of contract must be
mentioned in the Rental Agreement.
·
Lease
Deed/ Rental Agreement - A rent agreement or a
lease deed is a legal document that contains the details of the rights of a
tenant to occupy certain property for a fix period of time in return of the
rent paid by him to the property owner. This agreement is ideally drafted
before the tenant occupies that place. Necessary Inclusions of the
rental agreement or the Lease Deed would be;
·
Include start and end date of the tenancy
·
Monthly Rent amount payable and the date of payment- should
generally be 10th of the month, especially for salaried persons, to
avoid cheque bounce.
·
Security deposit amount to be paid. This is refundable &
should be mentioned in the Deed.
·
Service/maintenance charges. Is it included in the Rent or
over & above the Rent.
·
Responsibility of the payment of repair and maintenance.
·
Conditions of termination of Agreement.
·
Notice period for vacating the house.
· Provisions of
electricity, water and power facility & their payment procedure.
Property Owner / Landlord.
Rented Property generates additional income by way of lease or rent. But if
leased to a wrong person, could cause numerous problems. It requires
substantial care and a lot of aspects have to be kept in mind while selecting
the right paying guests (PG) or purchasers on rent (rent party):
·
Must check financial capability and background of the prospective
tenant (Second party). (Too good offers are dangerous. If the going rental is
Rs X and you get offer of Rs 2X, reject it)
·
Police
verification of the prospective tenant is
a must. This process helps in background check
of the tenant. Not doing this is a punishable offence under Section 188 of the
Indian Penal Code.
·
Take
the permanent address proof of the prospective
tenant.
·
Take
the bank statement of the bank from which the payment cheques are made.
·
Meet
the tenants one on one, interact with them and get to know them. Don’t leave it
on the broker – his sole interest is Brokerage.
·
Services
of Registered Brokers only must be used. If he charges service tax, (currently
14%), he should deposit the challan & give details of it to you.
·
It is imperative for the landowner to ask the appointed
broker to provide the agency registration number, valid signature and agency
seal/ stamp on every page of the 'Lease and License' accord so that the broker
can be held accountable to look after any legal disputes in future.
·
If possible, rent your property to Tenants with families. If
renting to Bachelors, obtain “Comfort Letter” from the Employer of the
prospective tenant & do a call check with the Company’s HR / Admin.
·
Lease
Deed/ Rental Agreement - A rent agreement or a
lease deed is a legal document that contains the details of the rights of a
tenant to occupy certain property for a fixed period of time in return of the
rent paid by him to the property owner. This agreement must be drafted before
the tenant occupies the place. Necessary Inclusions of the rental
agreement or the Lease Deed would be;
·
If
the period of time is 12 months or less, registration is not compulsory. If
more than 12 months, you are legally bound to register which costs a miniscule
amount (nearly 1% of the total rent value, depending on the local laws), making
it a very authentic legal document.
·
Clear
mention of Dates; to and from.
·
Notice
period required from both sides; owner and tenant.
·
Rental
value and the security deposit made by the tenant and any advance payments
done.
·
The annual rent is generally 2-3% of the capital value and
differs according to the location and amenities provided.
·
Date of monthly rent payment (usually around 10th
of each month, especially for salaried tenants).
·
Annual increase in Rent Clause.
·
Mode of payment; ECS mandate or Post dated cheques. AVOID
CASH TRANSACTIONS.
·
Clear mention of the size of the property and the number of
rooms, bathrooms, kitchen, etc.
Wishing you
a Happy Letting out / in. You may make lifelong friends with your Tenants /
Landlord. Happy Safe homes is what is important.