Renting your home is not uncommon. When you have a house which is not unoccupied for any reason, it is best to give it on lease. Unoccupied houses can be a bane. Forced entry by trespassers, pesticide problem and wear and tear if kept unused for long are some reasons good enough to rent it out. However, homeowners should take the time to address and prevent the potential pitfalls of this option, especially when you live outside the country. After, all it’s still your house!
Salma Hussain, a Dubai based entrepreneur says, “I am an NRI and would like to put my recently inherited property in Mumbai on rent. Since I am based out of Dubai, I have no immediate use of the house. I do not want to sell it off as Mumbai realty market appreciates every year. I will use it for investment purposes only. Since I am unaware of the rental market of India, kindly suggest the dos and don’ts.
Involve brokers: Involving a broker or an agent is always considered safe. The agent will be responsible for vetting potential lessees and can also help you in case a tenant refuses to vacate the flat.
Check background: After finalising the tenant, the agent will assist in checking your tenant’s background. Police verification is a must. The police will keep a copy of all the documents submitted by you and the tenant for their reference. If the tenant has a history of criminal activities, it is bound to surface.
A reference from the previous landlord also helps. Though this practice is not prevalent, it is effective. A reference can tell you how long the tenant stayed in the previous property, how s/he maintained the house and whether the rent was paid on time. This will help you gauge the tenant’s reliability, trustworthiness and honesty.
References also give a general an idea on whether you are charging the correct amount monthly.
Check bank statements: Ensure whether the tenant will be able to pay the rent or not by knowing his monthly income. Also, ask him to provide an official letter which includes date of joining and the type of employment contract. In case you are renting your property to students, don’t forget to make a note of their parents’ phone numbers in case of emergency.
Go for short renewals: Rent out your property for a shorter period. The standard rent agreement is made only for eleven months. There are agreements where you can go for a 36 months’ rent agreement. However, experts say that the shorter the period of rent agreement the safer you are. If you do not wish to go ahead with the same tenant, this way you have a scope to re-think.
Document it! Every rental agreement should be in writing and registered. “The rental agreement should cover the term of the lease, monthly rental amount and security deposit. It should specify all the terms and conditions such as who will pay for utilities water, electricity and maintenance charges. The purpose of tenancy should be clearly mentioned, such as whether the property is being used for commercial or residential purpose. If the rental agreement is set to expire and you and the tenant agree to extend the term of the lease for a specific period, then the extension should be in writing,” says Santhosh Kumar, CEO – Operations & International Director, JLL India.