Renting out need not be a headache
Real Estate
By Vasu

THE tussle that goes on between landlords and tenants is age-old and has several never-changing patterns and perceptions. However, in the more balanced market of today, the tenant is no longer the necessary evil to be tolerated while the landlord is no longer the dragon who refuses to get his premises whitewashed or repaired.

Times have changed, says R.K. Pancholi who owns a palatial five-bedroom house in Vasant Vihar, one of the prime addresses of Delhi. Three to four years earlier we could literally hold an auction for renting out this property, says the retired government officer. This time, when the lease expired, we had to undertake massive renovations to ensure that we attracted the right kind of tenant. Things are no different in other parts of the Capital. A journalist posted out of the Capital asked his tenant to raise the rent marginally. To his chagrin, he discovered that the occupant of his abode had several options ready in the near vicinity at marginally lesser rates. The reasons for this sudden availability of housing and more choices for the tenants are several, says K.K. Arora, a realtor.

Last year, the Haryana Government had announced that people would lose plots or be penalised heavily for failure to construct houses on their plots. This spurred owners to build houses. For a long time, the plots had been lying vacant and were not adding to the housing pool. The same situation was applicable to housing societies in Delhi, Ghaziabad, Faridabad, Noida and adjacent areas. In Panchkula, close to 2,000 plots are ready or being readied for occupation. In the suburbs of Delhi, both houses and flats are available literally in thousands. Since they are often the second property option for most owners, renting such property at least takes out of its maintenance. Despite this availability, rentals went up marginally, even during the slump. Easier housing construction finance by the HDFC and the LIC besides numerous other banks also resulted in the expansion or renovation of property.

Better exposure to builder flats and pre-constructed private colonies raised expectations about the minimum level of facilities available in a residence, says Geeta who has recently shifted to a well-built, all-granite apartment. Things like marble flooring, plates fixtures, exquisite lighting and chrome glass combinations were once to be found in very few homes. Today even middle-class families go in for the maximum glitter they can add. Simplicity and humble abodes belong to the past, she adds.The same is true whether one is building or renting out one’s premises, says Sudhendu, the owner of a flat in one of the suburbs of the city. Tenants these days ask for fans, geysers in every bathroom and kitchen, proper exhaust systems and the latest in wall colours. The days when one could rent out a dilapidated barsaati are gone, he says. The add-ons have to be there and the house has to be in a ready-to-move into condition.

Is there a gameplan by which one can get the best possible tenant and rent combination? The first step is appraisal of your property. Make a ‘to do’ list of all the repair and renovation work the house requires. It helps to get in the plumbers, carpenters, electricians, painters in all at once and put things in place. Step two: Instead of proceeding to put in an advertisement in the paper take a look around. Go and explore what the market is offering or demanding. Go and survey the neighbourhood or similar colonies, sectors for similar accommodation as a prospective tenant to get the right figure of how much you can demand. Find out the amount others are seeking as advance. After one arrives at a figure one can ask for, either proceed to put in an advertisement or seek out some brokers. Brokers normally take about 15 days’ rental, as service charges but one can bargain for less. However, given the market sentiments today, brokers may swindle you for more.

While renting out, it is better to just have one broker, a practice which keeps your lowest rent limit intact. While looking for accommodation, the more the merrier rule holds as competition amongst brokers gets you the best bargain. However one can rent out property without the aid of brokers on weekends. It helps to have ready drafts of landlord-tenant agreements. It can be tempting to consider part payment of rents in cash. But this practice should preferably be avoided. Though the taxman bites, cheque payments for rentals are always better. Advance cheques for the entire year are even better coupled with an advance security deposit which is refundable at the expiry of lease or adjustable in future payments. Renting out need not be the headache one thinks it is.

Meanwhile, the real estate market continues to be in a slump and opinion is divided whether people should invest now in their own property or rent now and buy six months later. However, this is the right time for NRIs to buy, says Vikram Ahuja, a financial adviser at a multinational bank. The timing is right both in terms of getting the right price and the right payment terms due to the recession in the Indian economy, he says. The government today offers several incentives, including repatriable dividends and tax holidays, and savvy NRIs should start evaluating property now, he says. Most multinational banks help expatriates buy property and make payments. NRIs should ensure that they pay only through banks, Ahuja says, adding that with low prices and a low rupee, NRIs can’t go wrong.