Rent has always been considered as a permanent source of income. Most Investment is made in immovable property with the objective of having secured returns in the future.
Many property owners who intend to rent/lease out their properties for generating income approach us with their related issues and we frequently deal with queries which are frequently raised by them are as follows:
What is the difference between the lease and rent agreement?
The lease agreement is an agreement between the parties where the rental period is extended. The lease period and the lease amount are fixed. The terms of the agreement can be revised only when it ceases to operate. After the end of the lease period, parties have to enter into a new lease agreement.
Rent agreement is an agreement between the parties where the rent is fixed for a short period, usually for a month. Every month the agreement expires, and a new agreement is entered into. The terms and conditions can be changed in every new agreement.
How to select the tenant?
The landlord must ascertain the credentials of the tenant. Police verification of the tenant is also a must as it helps to check any criminal record of the person. Tenant must supply his name, family details, place of work and other relevant information. Particulars can be cross-checked from employer or friends or earlier landlord if any.
Also Read: The powers and rights of landlords in India
How to fix the rent amount?
Rent amount depends upon various factors:
- Purpose of renting out the property – residential or commercial
- Location of the property
- Prevalent rent in the particular area
- Furnishings provided in the accommodation
- Facilities provided to the tenant
What are the essential points to be taken care of in rent agreement/lease agreement?
Rent/Lease agreement is a legal document stipulating the rights and obligations of the parties, i.e. the landlord (lessor) and the tenant (lessee). Some of the essential points to be included in the rental agreement are as follows: (The list is not exhaustive)
- Rent amount
- Mode and time of payment of rent
- Period of tenancy
- Penalty if the tenant violates any condition of rent agreement
- Liability of tenant in case of damage to the property
- Mode of ending the tenancy – whether notice required or not
- Notice period for vacating the premises
- Charges which can be imposed if the tenant does not vacate the property in time
- Change in rent amount on the periodical basis, if any
- Renewal of lease, if allowed
- Maintenance of Property
Rent agreement must be signed by both the parties and independent witnesses.
What about registration of rent/rent?
Only a registered agreement can be used as evidence in court in case of any dispute. Stamp duty has to be paid for registration of the agreements as per law. Registration of documents safeguards the interests of both the parties. Registration of rent/lease agreement is compulsory in case of the lease period of more than a year or year to year. If the rental period is less than a year, registration is optional.