Answered on December 31,2019
1. The objective
Principally, you would have to be clear in your head regarding what do you want your property to rent out for i.e. for commercial or for the residential purpose. If the goal is to put a residential property on rent, the succeeding approach will be in accordance with the same. Generally, the rent agreement for a commercial property is made for a longer-term than a residential lease agreement. Also, the rent amount for a commercial property is usually more than that of a residential real estate.
2. Get the property insured
A wise landlord will first get the insurance of his/her property before putting it on the rent. When all is said and done, your tenant will be handling the property not you. So, get in touch with your insurance agent and avail of the maximum liability coverage for your house or flat.
3. The rent amount
Once the purpose is fixed, you can move on to fixing the rent amount. What your tenant is going to pay should be established through the justified calculation and certain considerations. Part of housing societies will charge the landlords (who have rented out their house or flat) albeit permitting the tenants to leverage the amenities of the housing society. Broadly, the rent of housing apartments lies in the vicinity of 2-3 percent of the annual capital value of the apartment. You should also keep in mind that the rent amount differs as per locality, facilities available, and allied factors while setting up a fixed rental. Most of the first-timers prefer taking the assistance of a real estate broker for a precise estimation of the rent amount and to get familiar with the rent agreement provisions.
4. Where to look?
You can begin by start listing out your apartment on various online portals or by getting in touch with the local real estate agents. For those who have a lavish apartment or an expensive bungalow to put on rent, getting a property consultant might offer convenience in the leasing process.
5. The tenant
Whether it's the first time or not, getting a background check on the prospective renter should never be overlooked to get the right tenant for your house or flat. If your property is in a housing society that does not entertain bachelors, you should also make sure to rent out your property to married couples only. In the same line, get in conformation with the rules and guidelines of the housing society before you sign up that rental agreement with a potential tenant. You can also check with the employer of the tenant to get to know him/her more. Along with this, it is mandatory to get the police verification of your tenant and submit a copy to the housing society your property is located in. As per Section 188 of the Indian Penal Code, not getting the background check on the tenant is a punishable offense.
6. Never discriminate
It's understandable and justified that only you can decide who lives on your property. However, Indian law states that no landlord should discriminate among prospect renters on the basis of their gender, color, religion, profession, familial status, and dietary preferences. While you draft the rental agreement, you must incorporate the clauses under which you can provide an evacuation notice to the tenant.
7. Getting a rent agreement ready
A rent agreement ties up a landlord and a tenant in a common accord where the interests of both parties are shielded. Therefore, when you are devising a rental agreement, it should incorporate features like the tenure, monthly rent amount, security of deposit, purpose of the stay, and so on. A complete rent agreement encompasses provisions like who is accountable for the payment of the utility (water, electricity, and maintenance) bills. Also, you can add up auto-renewal facility, effective dates, and the extension of the termination clauses to dodge any confusion or tiff in the future.
8. Registering a rent agreement
As stated in the Registration Act 1908, any agreement of more than one-year epoch is mandatorily needed to be registered with the local authorities. This means if your rental agreement is made for one year or more, you would have to register it. If a rent agreement (of more than one year) is not registered, it cannot be produced in the court as a piece of evidence in the event of a conflict or faction in the future. On the other hand, if your rental agreement is for a typical 11-month period, then you don't have to get it registered but only pay the stamp duty charge.
In addition to the above-stated tips, you can keep visiting your property to do occasional checks to keep an eye that the tenant is not breaking any terms and condition instated in the rent agreement.