Things to Know While Renting out Property

Property is a favoured investment choice for rental cash flows it can bring, along with appreciation in price. Here are few things you must keep in mind before leasing out your property.

Know your tenant

As far as possible try to gather background information about the persons you are about to rent out to. Especially in big cities people move in and out very often. As landlord you will share responsibility for any eventualities involving the tenant. Renting out to the wrong tenants can give you headaches for more than what the money's worth. However remember that a landlord cannot discriminate between prospective tenants on grounds of religion, caste, colour, language, sex and family status.

Rental agreement

Prepare a written rental agreement for leave and license. It is mandatory to register agreement in certain localities. Before registering the agreement stamp duty must be paid on it. Stamp duty differs from state to state. It is Rs 100 per sq mtr on residential property and Rs 1000 per sq mtr on non-residential property. Registering the agreement will be useful in the unfortunate event of a dispute.

Mention all relevant details clearly in the tenancy agreement. It should include names of landlord and tenant, address of property, period of lease, rental amount in words and figures, deposit amount and conditions for non-refund. You can include terms and conditions for maintenance of property. Some people might even include number of persons allowed to stay and permission for pets. You can even mention about responsibility for paying bills- electricity, water, etc. In case of non-residential property clearly mention purpose for which property can be used.

Communicate your rules

If you have certain preferences about how your tenants should use your property, communicate it to them. Especially in housing societies it may be necessary to honour rational expectations of other members, in your own interest. Accordingly let the tenants know if you would like them to abide by certain rules for timing of coming in, non-vegetarian food, bringing guests for overnight stay, noise levels, cleanliness, etc. Although nobody can enforce these rules, communicating them in prior might help you avoid unpleasant surprises and circumstances.

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