SynopsisCovid-induced disturbances took a toll on the residential rental market but the situation is improving. While this is the ideal time to search if you want to rent a home, don’t be in a rush to sign the rental agreement. Read the documents with care.
Thousands of people vacated their rented accommodations in metros and shifted back to their hometowns as the pandemic raged and work from home became the norm. However, the trend is reversing now. As offices reopen, the workforce is coming back and is on the lookout for homes again. The preference seems to be for bigger homes and independent living as opposed to sharing an apartment with friends. Rental demand is rising. Will it mean pressure on rental rates too? Yes, experts say. “We are expecting a surge in rental rates in the next 3-4 months because of reopening of schools in June, which will accelerate the trend of people coming back to cities. It is better to decide on renting now,” says A.S. Sivaramakrishnan, MD, Residential Services, JLL.
While this is the ideal time to search if you want to rent a home, don’t be in a rush to sign the agreement. While a rental agreement will contain several details and they are all important, both sides need to be extra careful about a few points. Cross check on the points given below before you finalise the deal.
1. Exact rent
All rental discussions start with the rent to be paid and all rental agreements mention the amount, date on which it is to be paid and the penalty in case of late payment. However, make sure the amount mentioned in the agreement is what was decided verbally. “In addition to mentioning the rent to be paid, agreements should also specify what all it includes or excludes,” says Santhosh Kumar, Vice Chairman – Anarock Property Consultants. For example, you need to discuss and agree on whether the landlord or tenant will bear the expenses like the society maintenance fee, society parking charges, etc.
2. Rent escalation clause
This clause deals with the quantum of increase in rent and the time-frame for this revision. This revision usually happens per annum in case of long term agreements of three to four years and at the end of tenure in case of short term agreements like renewable 11 month leave and license agreements. Many first-time tenants don’t seem to be aware of this clause and its mention on the agreement comes as a nasty surprise. Discuss this point with the broker or house owner while looking for homes.
3. Notice/lock-in period
Though rental agreements are for fixed terms, like 11 months, three years, etc., there may be circumstances under which the landlord or tenant may have to terminate the agreement. “The conditions under which a rental agreement can be terminated prematurely by tenant or landlord and penalties for violation of these conditions must be clearly stated in the agreement,” says Kumar. Two terms—notice period and lock-in period—need special attention. Notice period is similar to that in job contracts and tenant can vacate or landlords can ask the tenant to vacate after giving reasonable time. The notice period is usually a month and will be applicable for both the parties.
Lock-in period means the tenant can’t vacate the premise during this time or the landlord can’t ask the tenant to vacate the premise. Lock-in periods are usually around three months for 11-month agreements and 6-9 months for three-year agreements. The penalty can be harsh here—the tenant has to give up claim on deposit money or the landlord has to return double the deposit money, etc. Read the agreement carefully and make sure you agree to the terms mentioned.
4. Restrictions alert
Subletting of rental property is restricted by law. However, tenants need to be careful because landlords may put in several other restrictions like not allowing pets, not allowing parking inside society parking lots, etc. Discuss all the restrictions in advance and make sure only the restrictions that you agreed to are part of the final deal. You can also object to unreasonable restrictions— like not allowing applying for passports while staying on rent, etc.—imposed by landlords.
Since most rental agreements are for fully furnished or semi furnished premises, documenting the furniture and fittings is important. “Detailed list of furniture, fixtures and fittings and repair charges in case of damage are usually given as part of annexure. Read and verify them carefully to avoid problems later,” says Sivaramakrishnan.