In this article, we shall take a look at some of the things one must consider from a legal standpoint before renting out your property.
Introduction
Over the past few decades there has been a major socio-cultural change in the way we look at relocating for work. Most people actually look forward to moving away from their homes to work and gain a sense of independence early on. And these people who relocate for work do not prefer to buy property for residential purposes but to renting a house, in case any other lucrative opportunity requires them to relocate once more. So renting property for residential purposes has become an industry unto itself, especially in commercial hubs.
Renting a House or Leasing out spare rooms in the house has become a common way to supplement primary incomes. In fact several people invest in properties just to lease them out and there have been instances where people construct an extra floor or two in their independent houses with the specific intent of leasing it out for residential purposes.
From a regulatory perspective, it is well known that a rent agreement is the primary document in this arrangement. There is the owner of the property who is known as the landlord or the lessor and then there is the person seeking to rent the property who is known as the tenant or the lessee. But there are certain things beyond the rent agreement that should also be kept in mind as a measure of prudence before leasing out a property to someone.
In this article, we shall try to shed light on some of these basic measures a property owner must consider before leasing/ Renting a House in India .
Police Verification of the Tenant
Before renting your property or drawing up an agreement, let’s just be sure that the Tenant you are renting your property does not have any criminal background and he shall be able to pay the rent in time. The Section 188 of the Indian Penal Code makes it a mandate for all the landlords to get the police verification done for the tenants. This is a simple procedure and you just need to fill in the online form in the respective state online portals with the relevant documents. The police process the application and then send the final report.
Details to Be Discussed with the Tenant
When you rent a property you need to discuss with the tenant, what would be the advance amount that is required to be paid by the tenant and when is he supposed to pay the same. What is the amount of rent that is to be paid? Make sure that the rent amount is reasonable and fair and in accordance to the state Rent Control Act. The date on which he is to pay the rent or the period during which he needs to pay the rent. Usually, the Advance is paid by the tenant before occupying the property and the rent is advised to be collected during the 1st week of every month.
Negotiable Terms with the Tenant
You can always negotiate with the tenants on terms and conditions regarding pets, details regarding repainting, the furnishing of the property etc., also discuss the time period in which you may visit the rented property for inspection.
Have a Rental Agreement
The next step is to have a rental agreement. The rental agreement needs to be drafted very carefully including clauses like the details of the property to be rented, the time period of the rent, the period of notice for renewal or rescinding the rental agreement, what is the rent amount and when shall it be paid, the amount of advance and security deposit to be paid, small details including who shall pay the gas, electricity, water bills, maintenance charges etc., and the rights and duties of the tenant and landlord to be provided.
Registering of the Rental Agreement
Under Section 17 of the Indian Registration Act, it provides that all rental agreements exceeding the period of 11 Months shall be registered mandatorily. But in certain states like Maharashtra every rental agreement has to be registered accordingly. Hence the rental agreements are to be registered with the state registry by paying proper stamp duty and registration fees.
Conclusion
Rental income is one of the safest sources of income. And it is a smart investment as well. Not only do you earn a monthly income from the property but you also get to see your property appreciate in terms of real estate value as the years go by. So it is not surprising that many people choose to invest their disposable income in this avenue. But disputes over rent arrangements, or improper documentation during the time of renting a house have often led to trouble for the property owners. So it is always best to consult a legal expert who can give you a specific list of dos and don’ts when it comes to leasing property. If you have any other queries with regards to renting a house or are looking for help in drafting the documents for leasing your property, do contact us and we will ensure that our team of experts connect with you to assist you with your requirements.
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