If you have a property to rent,it is vital to understand your rights and responsibilities as a landlord before you can think about getting your new tenants through the door.
Renting out an ‘unoccupied property’ is one of the best ways to get returns out of properties. Not just that, you also enjoy capital appreciation. Given the current property prices, many people refer to live in a rented apartment for a few years, till they stabilise their careers.
• Market supply and demand forces: Demand for quality accommodations outstrips supply. Availability of stock is constrained in certain sought-after buildings, allowing home owners to charge a premium rent.
• Age of building: As per the normal market norm, new buildings will fetch higher rentals value in comparison to older properties at given location.
• Range of recreational facilities available: Properties with a good range of amenities are provided are popular, affecting the rental value of an apartment.
• Existing condition of the premises: The condition and internal maintenance of an apartment, including the choice of furnishings, would again play an important role in determining the rentals for the property.
The level/storey of the apartment, unobstructed view of the apartment, vehicle parking spaces available, and security features, recreational facilities like swimming pool, gymnasium, and kid’s play area would also play an important role in determining the rental value of the premises.
The relationship between a landlord and a tenant is a legal contract called “Leave and License” wether month to month, year to year or even for a span of years. The “Leave and License” can be for any period upto 5 yrs. 5years and beyond would termed as a “Lease agreement”. 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 interest of landlord and the tenant. It is prerogative of the owner to secure his/her property and draw up the agreement. By clear definition of “Agreement” it does mean when both parties “Agree”.
A comprehensive agreement includes everything from details of the rent to how you handle tenant complaints and other issues associated with repairs and maintenance. Most companies who regularly rent for their people follow their legal department or lawyer’s pre-approved contracts which are usually fair, but like I said before, it is prerogative of the owner to secure his/her property. With help of a qualified professional broker or agent either party could run through the contract, alter it or get it approved and get the process of stamp duty and registration routed through him or her for a cost.
Many landlords overprice, trying to hold out for months, expecting a higher rent than the property would actually command .Recently, a 2000 sq ft apartment with a large terrace in South Mumbai overlooking the sea, originally quoted at Rs 10 lakh, was eventually rented for Rs 7 lakh. This is a pointless exercise based on the fact the property usually remains vacant for months while the owner seeks an unrealistic rental figure. If after many months you have to reduce rent anyway, be realistic and get your property rented immediately.
I would like to share with you a recent experience : We custom designed a home for an expatriate tenant last May and rented the fabulous sea facing house to him for a premium, which he happily paid. The entire cost was to be recovered over a period of three years. The contract is for three years with a lock-in of 24 months from both parties. The tenant paid advance rent of 12 months. In November the building started major repairs of which the tenant was made aware much before we signed the contract. Now that the work is on in full swing; the windows are covered from all side there is noise, dust and the tenant’s wants to leave out of frustration.
I personally went to the building and the apartment to understand his agony and felt he was rightfully frustrated. I spoke with my landlord and he very grace fully decided to return his deposit amount and terminate the contract at the end of 12 months and give a further rental refund to compensate for the discomfort. The tenant wants to leave because he finds it uninhabitable to live there for next five months under those conditions. The landlord could exercise his right as per contract to get him to pay the next year’s rent but it is unfair and he understands that. Now, this is how we need to be graceful in our dealings and build in a clause to have the broker to be the arbitrator in case of such situations.