1. Verify the credentials of the prospecting tenant properly. Don’t be casual about it and do not blindly believe an Agent. Brokers/Agents will not be able to stand by you in case of a dispute. At the end of the day, the property is yours and so is the STRESS.
2. If the house remains vacant for a few months and you lose on rental income, do not panic and get desperate to rent it out in haste. Don’t compromise on your principles or the SOP which you have set. Better to wait than to repent.
3. (i) Request for Employment proof. It is better to request a current Employment Certificate from the HR department. Please verify the duration/length of employment with the current Employer/past employer. The longer the tenure(s) of service the stable the person is.
(ii) Request for a copy of both sides of the Aadhar Card to know the last address of stay.
4. It is advisable to register the contract with the local authority/court by paying the relevant stamp duty of the lease value. The tenant should be pre-informed and agree to share half the cost or the standard local practice. It safeguards you and your tenant equally. However, in case of inspection or scrutiny, the owner is liable to pay the relevant stamp duty along with a heavy penalty for withholding tenancy information & the state’s revenue.
5. Preference may be to rent out to an Employee of Public Sector Undertaking, Bank,
reputed Indian corporate house, or a Multinational Company. A young family will always be better. Nearly everyone in the profession of Law is very responsible, honest, and upright in their dealings; however, there are always a few dirty fish. I am twice bitten four times shy, so personally, I will be very careful in leasing to a Lawyer or a Law firm.
6. Owner may keep a track of monthly payments being made to the Resident Welfare Association / Maintenance Office by the tenant. It will give you an idea of the Tenant’s sincerity and also of outstanding amount if any.
7. In the Lease agreement, ensure that the clause about Security Deposit and its refund is unambiguous. Tenant shall not adjust any month’s rent with the Security Amount deposited with the Owner. Security Deposit is taken as a safeguard towards outstanding dues for essential services, service providers, and Maintenance charges; damage to fittings and fixtures, etc. SD is to be refunded after inspection of property for damages, verification of No Dues towards essential services and service providers, and peaceful handover of the property as per terms mentioned elsewhere in the Agreement.
8. 11 months is the usual tenure of a lease agreement with a 10% escalation in rent at the time of renewal. Shorter stays are an unnecessary drain on the pocket of the Owner. It will entail repeat expenditure on cleaning, painting, and brokerage.
It is advisable to put a six-month lock-in period clause. Earlier termination by the tenant will result in forfeiture of 1 month equivalent rent from the Security Deposit.
Penal interest at the rate of XY % per annum may be proposed as payable on the outstanding rent till the date on which rent for the said month(s) is paid. In addition, a breach of contract & harassment charge of INR X per day may also be proposed as payable by the Tenant along with reimbursement of legal expenses incurred by the Owner.
9. In case of a Force Majeure event; for example a Pandemic, the rent can be deferred/postponed to a mutually agreed reasonable date in the future. A partial or complete waiver or exemption from payment of rent cannot be claimed as a right. The hardships, personal obligations, and constraints under Force Majeure event affect the owner and tenant alike. The parties have to brave such conditions with mutual compassion and understanding.
10. Enlist with or engage a professional Home Caretaking Company for better management and upkeep of your asset. The Company will periodically clean & sanitize your vacant home, monitor the house for seepage, pest infestation, or encroachment. The Company can also help in monetizing it.
After renting out the property, the Home Caretaking Company can also be asked to visit the rented premises periodically on your behalf. It will help to keep a tab on the tenant’s activity, upkeep of the house and also offer support to the tenant in ways possible.
I suggest that you entrust your Asset to a registered Company than to a free-floating local Agent. It may be a small cost to pay for your PEACE of mind, better and quick returns.
Good Luck with Stress-free returns from your asset.
Amit MEHROTRAA
*Note: The tips given and views expressed by the author who is based in India are personal and non-binding to the reader, owner, or prospective tenant of property anywhere within India or abroad. The contents are for general awareness only and the reader is advised to check local rules and regulations before signing a Rent/Lease Agreement for his/her House. The views are without malaise towards any gender, profession, and section of the society.
E&OE