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Renting out property: The must-read guide

Friday, October 27, 2017
By Property Team

The unpredictable property market and prohibitive property prices are driving a lot of home buyers towards the option of leasing a property

Renting out an ‘unoccupied property’ is one of the best ways to get returns out of property. Not just that, you also enjoy capital appreciation. Given the current property prices, many people prefer to live in a rented apartment for a few years, till they stabilise their careers. If one takes a loan for buying a property, the lease rental returns are a good way to pay off the majority of your EMI. However, not all areas can give you higher returns, but generally one can feel comfortable that at least some amount of lease rental income is generated towards the payout of the home loan. Before you begin the process of letting out your property, you need to know basic factors as follows:

Location
Locations like Thane, Kharghar, Vashi, Belapur and those beyond Borivali do not enjoy high rent values; the availability of rental apartments is far more here in these locations compared to the demand from individuals or professionals looking to rent homes.

All about building and premises
Generally new buildings would fetch higher rental values in comparison to older properties at a given location. Needless to say, the better and fairly well maintained buildings would fetch a better rent. The condition and the internal maintenance of an apartment, including the choice of furnishings, would again play an important role in determining the rentals for the property. The layout of the premises in terms of optimum space utilisation in an efficient manner, terrace or a balcony, availability of maid’s room and toilet help the premises score points.

Leave and License agreement
Many property investors who buy property as a second home are more linear towards the Lease Rent Income. The relationship between a landlord and a tenant is a legal contract called “Leave and License.” whether month to month, year to year or even for a span of years. The “leave and license” can be for any period up to five years. The “leave and license” agreement would list along with other terms the period of lease, deposit amount and monthly rental and clauses to protect the interests of the landlord and the tenant. A comprehensive agreement includes everything from details of the rent to how you handle tenant complaints and other issues associated with repairs and maintenance.

Furniture matters
Many tenants are delighted to have found the ideal home; however, due to their furnishing requirements the landlord is unwilling to lease the property to them. In most cases, the lease rate per month will increase if furnishings in the property are to be added or removed. The increase in the lease rate depends on the number of items to be added or removed on the tenants' request. A partially furnished property is equipped with lighting, air-conditioning and basic kitchen appliances. A fully furnished property includes all the above mentioned as well as furniture like beds, sofa, and equipment like television, washing machine ect.

The final check
Make a check list of all things provided by yourself and let the documents of List of things be signed by both of you mutually. List down all things which are broken or damaged. Please check for Electrical meter and take down the meter reading on your possession date. If you don't have a meter for the premises then check or get a sub-meter installed, which will avoid further confusion.

The mantra today for investment has changed. With growing needs and expectations, it is essential to understand the dynamics of the ever-changing world of real estate to benefit the most and it is always advisable to capitalise on your investments by giving the property on lease than to leave the same notional.

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