Broker’s Corner: Things You Must Know Before You Enter Rental Market
Real estate rental holds a huge potential for the brokers planning to enter the arena. With millions of property to be given on rent and a greater number of tenants on a lookout, success is guaranteed, only if strategised well.
While the commission you earn as a broker of a rental property is not on par with what you might earn by selling a house, there are certain advantages that make the rental market a viable business.
It is an evergreen market. Especially in cities like Delhi-National Capital Region, Mumbai, Bengaluru, Chennai, Hyderabad and Pune, which have witnessed a high influx of people moving in and out from other cities, the rental market makes for a tremendous opportunity for brokers.
It is relatively easier to rent a house and the deals can be closed quickly as compared to buy-sell property transactions. The income generated from brokerage on rental properties can provide for a sound cash flow essential to keep your business in good health. It keeps you going even when the real estate market is down. After all, if people are not buying houses, they will go for rental properties.
MakaaniQ lists the necessary aspects of dealing in rental properties:
In order to maintain law and order, the authorities have made it mandatory for landlords to get the police verification done for all their tenants before renting a property.
When a landlord engages a broker, it becomes his responsibility to get this done. Therefore, the moment landlord and tenant get ready to rent a house, your first step after taking the advance should be to take down all the details necessary for police verification.
For this purpose, you will have to take the ID and permanent address proofs of the tenant, along with his or her passport-size photographs. You should also request for office ID card as that helps in verification.
Generally, the office of superintendent of police (SP) verifies the records. Once you get clearance from this front, you can move to the next step i.e. preparing the rent agreement.
Preparing a proper rent agreement is the primary responsibility of a broker. As a professional broker, you should take this activity very seriously. You must capture the below details in the rent agreement before it goes to the client:
- Security deposit
- Period of lease/rent
- Monthly rent
- Date by which the rent should be paid every month
- Penalties, if any, in case of delay
- Implications if the rent is not paid
- Duties and responsibilities of landlord
- Duties and responsibilities of tenant
The agreement must specify the purpose for which a tenant rents a house. As a standard practice, landlords do not allow tenants to sub-let their property that means a tenant cannot further rent the same property, whether fully or partially. Similarly, a rental property taken for a residential purpose cannot be used for any other purpose.
The broker must also clarify with the tenant that they cannot make any changes that can impact the structure of a property both externally or internally. It is advisable to include a list of all the assets provided to the tenant in the agreement. This includes fans, tube-lights, geysers, chimneys, locks, wardrobes, etc.
Always request the landlord and the tenant to sign the rental agreement in presence of at least two external witnesses who are also expected to sign the agreement.