When it comes to giving out their property and land on rent, owners’ concerns usually revolve nearby the quantum of rent to be charged, tenant’s capacity to pay queries about the Rent agreement, security deposit, lock-in period, verification tasks and registrations if any. Without due diligence, it can become a severe headache and often a nightmare.

The most common problems that first-time landlords encounter include finding the right tenant, misuse of the property by the tenant, delay in receiving rent, tenants refusing to vacate and tenants not paying the maintenance fees (if the rent agreement requires them to).

Legal documentation

Proper legal documentation is vital while renting out a property. Infringement of property by illegal means, absence or delay in the receipt of rent and unlawful exercises owing to lapse in tenants’ background checks, are some of the risks that property owners expose themselves to, in the nonexistence of legal documentation. Moreover, without legal documentation, there won’t be any means to solve disputes.

Rent amount

Real estate specialists opine that the amount to be charged as rent is directly associated with the home’s value. Generally, the rental amount is 0.8 % to 1.1 % of the home’s total value. Additional factors that can be considered are, the location of the property (upmarket locations will have higher rentals) and facilities being provided (fully furnished, semi-furnished property). Other external charges, such as maintenance charges, may also be involved in the rent.

Rent agreement

Each and every rental agreement ought to be in writing and registered. The rental agreement should define the terms and conditions of the lease, the monthly rental cost and security deposit. It should also define who will pay for the utilities: such as water, electricity as well as maintenance charges. The purpose of tenancy should be clearly specified – whether the property is being used for residential or commercial purposes. If the rental agreement is set to terminate and you and the tenant grant to extend the term of the lease for a precise period, then, the extension should be in writing.

Registration of the lease agreement

It is essential to register the lease agreement, under the Registration Act, to execute it legally valid. As per the Transfer of Property Act, lease deeds, with an ownership of more than one year, should be registered. The common practice that is followed in the market is to enter into a lease agreement for 11 months, with the alternative to renew it when the period lapses, by another 11 months, provided specified conditions are fulfilled. Such leases should also be properly stamped.