Personal Finance

For hassle-free renting

Arvind Jayaram | Updated on January 23, 2018

Casper1774 Studio/shutterstock.com

Draft a comprehensive lease agreement



Renting out a property can be a good source of income. But being a landlord has its headaches too, which you can avoid with attention to detail.

Deciding on the rent

As a rule of thumb, rents are benchmarked to two to three per cent of the property’s annual capital value. But market conditions, the state of the property and amenities provided too, have a bearing on the rent.

A broker can help you finalise the rates. You can also find out the approximate rent per square foot in the area and apply it to your apartment or house. Keep in mind that good furnishings in your home may allow you to charge a premium.

Advertising the property

The internet has made life a little easier for landlords, with the option of listing your house on sites such as 99acres.com and magicbricks.com for free.

This could save you on broker fees. But brokers can save you effort by helping you with police verification of a tenant and preparation of a lease agreement. At the same time, keep in mind this drives up the cost for both the buyer and the seller. A third option is to advertise in newspapers, though this comes at a fee.

Verification

It is advisable to get proof of identity and employment from the tenant before signing up. Sharing tenant details with the local police is also important. All it takes is filling up the verification form —which is readily available online in many states — and submitting it to your local police station along with the ID proof of your tenant.

Lease agreement

The lease agreement needs to clearly state the rent to be paid every month as well as how you are going to share expenses. It should also document the period of tenancy, the terms for extension / premature termination of lease.

It should also clearly lay down the quantum of increase in rent on extension. An annexe listing out the fittings and fixtures in the property and the penalty for any damages should be included. It’s important to state the purpose of the tenancy, whether commercial or residential, to avoid any misuse of the property. Also outline the process for premature termination of the lease.

The security deposit and lock-in period for the lease agreement are also important. In case the lease expires, the method for refund or adjustment of the deposit against rent has to be clearly stipulated.

After renting out

Once you’ve given your property on rent, it pays to make a check once in a while to make sure your tenant isn’t violating any of the lease conditions or has sub-let the property.

You may also have to pay a visit in case the tenant refuses to pay the rent or the electricity or other bills as stipulated in the contract. In such a situation, you can demand that he vacate the house, but if he refuses to, file a police complaint.

Published on April 12, 2015

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor