A Tenancy transaction is the transfer of temporary possession of a rental property and certain rights that lie therein to the tenant for monetary consideration in the form of the monthly rent to be received by the landlord. The landlord is the owner of the rental property and premises with the tenant being to whom the property is let out. The tenancy transaction is for a determined period called tenancy tenure and can be renewed after the expiry of that period.
The parties to a tenancy have an agreement called rent agreement that contains terms and conditions that regulates their relationship. Before entering into a tenancy transaction with a landlord a tenant needs to do some serious groundwork about the type of property s/he wants. The tenancy tenure is going to be for an extended period and for staying in the house for that long means that the house should be habitable. This article seeks to explain what tenancy is and address some questions related to the topic.
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How does renting a residential property work?
Purchasing a residential property is a financially expensive and exhausting decision. It requires the utilization of a significant amount of financial resources at your disposal to purchase a long term fixed asset that keeps your funds blocked.
- Thus, purchasing a residential property is a decision that has to be taken after some serious thinking, preliminary preparation and research.
- It is for this reason that many people go with renting a house instead of purchasing a property.
- The decision works to benefit people who do not have enough financial resources to purchase an expensive piece of real estate or those who do not want their cash reserves blocked in real estate only for residential purposes.
- It benefits homebuyers because if they have excess residential space which is simply consuming money in the form of fixed costs. These spaces or parts of the property can be let out to allow the landlord to earn income that may supplement his or her income or simply be the main source of income.
- Renting a house is also easier than purchasing a house because there are fewer financial and legal procedures involved. Where purchasing a house may involve detailed inspection, valuation of the property, comparison of house prices, availing of a home loan, extensive negotiations and so on, renting a house does not have these many processes.
- Renting a house involves a tenant’s search for a habitable house to rent and a landlord’s requirement of a good tenant for letting out the property to.
- Due to the demand-supply situation leading a landlord to eventually find a tenant, all a landlord needs to ensure is that his or her residential property is habitable and has all the basic facilities to allow for modern living.
- After negotiating and discussing with the tenant, the two parties arrive at certain decisions that culminate in a rent agreement that needs to be in writing, at least made in duplicate, signed by the parties and then registered for official validation and authenticity.
Should I hire a realtor to rent out my house?
Many a time, if a landlord lives in a neighborhood of spacious houses, s/he can rest assured that there will be a steady stream of potential tenants who require a place to reside and who do not have the means to purchase an expensive piece of real estate for the purpose.
- For this reason, if you do reside in a place like the one mentioned above or have had tenants before, you can expect to meet a new potential tenant at the expiry of an old tenancy. In this case, you do not need a realtor to rent out your house and you can save on the money to be paid to a realtor.
- However, if you have a separate residential property and a separate property kept for letting out, you should think of hiring a realtor for renting out your house.
- If you live in another city and you have a property you want to let out in another city, it is best you hire a realtor who you can, keeping your interests in mind, find you a good tenant.
What does it take to rent a house?
A landlord is particular about the type of tenant s/he wants to let out the house.
- This is because, if a tenant has a criminal or questionable background or does not have the means to pay the rent, then it is majorly the landlord’s loss of reputation in the first case and financial loss in the second case.
- Thus, a landlord will check the following before letting out the house to a person:
- The sources of income of a potential tenant to check the solvency and the financial legitimacy of a person.
- Your credit standing and history to check the financial solvency of a person.
- Your background of a person to verify whether the person is the person who s/he claims to be.
- Your references like your employer and past landlords to verify your sources of income and your credit standing.
- Hence, a tenant needs to make sure that his or her credentials, references and financial standing are good if not impeccable to better their chances of renting a house.
How much does it cost to rent a house?
The renting of a house is dependent on the location of the rental property, the condition of the property, the space that has been rented out by the landlord to the tenant.
- Thus, with a nation as large as India with several cities, towns and villages which have different property rates.
- It is widely accepted that the property rates and renting costs are higher in major metropolitan cities in India than in semi-urban towns and rural areas in India.
What do I need to know before renting a house?
Just like a landlord needs to conduct a background check of a potential tenant before accepting him or her as a tenant or taking the next step in the tenancy transaction, a prospective tenant needs to check the habitability and condition of the house before accepting the tenancy.
- A tenant needs to conduct a background check of the landlord to ensure that s/he does not end up transacting with a person who harasses or demands too much from the tenant.
- S/he needs to have a decent idea of the rental rates and prices that are prevailing in the neighborhood or a reasonable estimate of the rent s/he needs to remit every month.
- There is a good chance that the tenant may end up paying more than what s/he is supposed to pay for the rental proper every month.
- This is because landlords may be exploitative of the fact that a tenant does not know anything about the property or has not conducted the required background check about the landlord and his or her prior tenancies.
- Thus, before entering into a tenancy transaction, the tenant needs to conduct a background check on the landlord and gather information on the property and inspect it for habitability.
How long does it take to rent a house?
The time it takes to rent a house depends on the time taken by the inspection of the house by the tenant, the background checks conducted by both parties into each other, the negotiations and the transfer of the tenant’s possessions into the rental property.
- On average the time taken is around 2 weeks but at the initiative of the two parties, the time taken may be lesser.
- However, it can also take nearly a month, if the negotiations and the transfer of the tenant’s possessions are delayed or extended beyond a certain period.
- If you choose to rent a house, you need to make sure that you are ready on your part to move in when you get the house. This preparedness cuts the time taken for renting a house by a great deal.
- There are documents like your identity proof, employment records, police verification that you should keep ready for a homeowner may ask these of you to verify your identity and your background. You should, in turn, examine electricity bills, the no-objection certificate from a society (in case of flats) and proof of homeownership to avoid future disputes.
The renting of a house can be a viable option for people who are searching for new residencies but do not have the financial resources to purchase a house. It also helps a homeowner who has excess residential space which s/he can let out to earn more income. The meeting of these objectives is achieved under tenancy transactions. However, there is the preparation that needs to be undertaken on both sides in the form of background checks, the house inspection and negotiation to determine the amount of rent that has to be paid by the tenant every month, the tenancy tenure and the expenses that need to be apportioned between the two parties.