Renting out one's unoccupied property makes good
business sense for most of the house owners. By renting out the
property, one can generate a considerable amount of income, which
can help in a number of ways, besides taking care of house
maintenance expenditure. All these windfall notwithstanding,
renting out their property has been a dreaded proposition for most
of the house owners.
Most landlords generally shy away from renting their properties
because of the general perception of bad tenant behavior. Besides
the litany of bitter experiences of landlords, rent control laws
favoring tenants also add to the woes of house owners. With
various state rent control laws yet to be amended in order to be
more equitable for property owners, an extra dose of caution is
called for before handing over the rooms.
After homing in on a particular tenant, one should check out his
background and his financial capabilities. Gather information
about his employer/business and whether he is earning enough to
pay the rental charges regularly. In case of companies, check
their track record and reputation, what business they do, whether
the society byelaws allow renting out for commercial purpose.
It is advisable to rent out properties for a short duration. While
big corporates may prefer a three-five year lease, landlords
usually prefer the relative safety of a leave-and-license
agreement, which ensures periodic renewal of the terms. The
eleven-month agreement is usually popular as these pre-empt the
rent control laws, which apply after 12 months.
While drawing up the contract, one should take help of a legal
expert and prepare a comprehensive agreement without any loophole.
In the agreement, include the following: clauses specifying what
are the charges, if not vacated when the contract ends; specify
that subletting is prohibited under any circumstance; mention the
period of notice to be given, in case of termination of agreement.
Even after all these preliminary steps, one should occasionally
visit the house, to make sure the tenant uses the house properly
for the specified purpose. At the time of vacating the premises by
the tenant, ensure that the house is in proper condition and
tenant has cleared all outstanding dues such as water,
electricity, and society fees. Return the security deposit only
when you are certain that all the dues have been cleared.
If renting the place to a foreigner, one needs to register with
the Police Commissioner. In some areas, even for renting out to
Indian citizens, one needs police permission.