Renting a home is not as easy as it looks. Thus, every landlord must take precautionary measures while hiring a tenant. The landlord must check a person’s family background, his/her previous rental records, marital status, occupation, permanent living address, workplace address and should also get the police verification done.
These are the basic things that you as a homeowner must know while hiring a tenant. Other than this there are various important clauses a landlord should know. Thus, this blog offers complete information related to hiring a tenant.
Concept of Hiring Tenant
A person hires tenant to earn additional income from his/her second home. The extra perks you earn from this property proves beneficial for repaying the home loan, else it can be used for other things according to the priority and requirements.
Way to Decide the Rental Amount
The rental amount is one thing that you can’t finalize as per the choice. The landlord requires to the review the local property market in order to find the actual rental amount of his/her property. Here, two things are important to finalize the rental amount and they are:
A tenant looks for secure and easy to commute residential property. So, if you have this kind of home to rent then, you are likely to earn higher rental income in comparison to others.
Secondly, a particular section of tenants looks to rent a fully-furnished home/flat that is enabled with all modern amenities. So, the better amenities you offer the better are the chances to earn handsome rental amount.
Types of Rent Agreements
There are two types of agreements that secure the rights of both the tenant as well as of the landlord. Both of these agreements are elaborated below:
- Rent Agreement – This is a lawful documentation that clears the transfer of interest from the property owner to a tenant. According to this agreement, the owner allows another person to use, live and acquire his/her property for a particular period. Usually, this period is for 11 months which can be further extendable up to the desired period according to the landlord or the behalf of a mutual understanding.
- License & Leave – This is an easement right and is defined and governed u/s 52 of the Indian Easements Act, 1882. The title transfer procedure won’t take place here, but the tenant is eligible for the occupancy of the property with landlord’s permission for a due course of time. But, the extended stay of a tenant in the property after the completion of due time course is said to be unlawful.
Necessary Things for Registration of Rent Agreement:
A landlord is required to register the rent agreement and pay stamp duty. The stamp duty percentage varies from State to State. For example, in Maharashtra, the Stamp Duty for a leave and license agreement is 0.25 percent of the whole rental amount. Similarly, the person is required to pay 5 percent of the entire rental amount.
Other than this, the homeowner is also required to produce the following documents and proofs.
- Rent/license fee
- Frequency of the rental increase
- Security deposit details including its refund
- Common area maintenance charges, the tenants’ responsibilities
- Repairs and details on who bears the associated costs
Tenure of Rent
The rent agreement is signed for a period of 11 months and the Leave and License agreement must not be signed for more than a period of three years. Another time-frame for rental accommodation is the Lock-in clause.
According to the lock-in clause, the tenant is required to stay in the rental property and can’t vacate the place before the completion of this agreement. The tenant is liable to pay the rent for the entire lock-in period in case he/she vacate the place or relocate to another rental home.
The procedure for renting a home is not simple as a property owner must protect his/her own rights.