HELP: Buying versus Renting - thoughts required.
hello members, this is just my 2nd post in this forum. Ive done some reading here and found it quite knowledgable.
i need some help and thoughts:
we will get around 6 crores (mix of cash and check) amount to buy a home and invest. we live in south delhi right now, and want to stay here.
i had earlier posted about south delhi builder flats and i dont think they are a wise investment. if one can get to live in the same builder flat at just 2 or 3 percent per year i.e. around 50-70000 per month rent for 200 sqyard new floor and invest the money in land in noida or gurgaon and move their when they are livable ?
does it make sense?
i am poor with finance and accounting, but has some forum member done any analysis using a excel file or some other financial acounting methode? we have to save on tax and need to buy another house also right?
i will be wanting to get some suggesssions!
My suggestion is dont invest in Noida.. GGN will give better returns.. Shift in the flat when you get posession.. Go for good projects, I will name a few on Sohna Road and GCX Rd:
1. Central Park - 2
2. Ireo Grand Arch
3. Park View Spa, Sec-47
4. Park View Spa Next, Sec - 67
5. Ireo Uptown
The above properties will give you decent appreciation as well as a very exclusive living space after one/two years depending on the project you choose..
Personally speaking living in a gated society is much more peaceful than living in plotted colonies where security/water/electricity is a huge hassle..
Express tips: Dealing with tough landlords
When Shivani moved to Bangalore to a better job, little did she know how tough it would be to deal with landlords in IT capital. Considered to be one of the most difficult places for tenants, the landlords and the brokers in Bangalore have set different rules for themselves. To her surprise the landlord demanded a lump-sum amount as a security deposit which was 11 times the monthly rent, a standard in this city.
The brokerage fee is also one of the highest in Bangalore. Conventionally this fee is borne jointly by the tenant and the landlord.
However, Shivani's landlord refused to pay his share, forcing her to bear the entire brokerage amount. When she finally moved in, things worsened. Despite repeated requests, the landlord would not get the bathroom fittings fixed, which had been broken before Shivani moved in. Moreover, at the time of vacating, he deducted a large fraction of the deposit on account of painting, repairs and other miscellaneous adjustments.
Most working professionals staying out of their home towns in a rented home would be able to relate to this story. Problems tenants face varies and could be about the property, area, clauses, brokers or landlords and their terms and conditions. The landlords often take advantage of the pressing need for accommodation that a prospective tenant has and then force through terms which are to the disadvantage of the latter.
Landlords usually charge a bulk amount as security deposit, which should be rightfully returned to the tenant when the latter vacates the accommodation. However, they usually deduct a large chunk of that amount on some pretext or another.
Landlords usually have scant respect for the privacy of the tenants. They do not even hesitate to visit the tenants at odd hours to check their house. In such circumstances, one should clarify this issue and ask the owner to come at a suitable time, preferably holidays.
There are several things in the house that undergo wear and tear and need maintenance and often, landlords do not pay heed despite repeated requests. You should note down the dates you speak to the landlord. If he is unresponsive, be patient and firm in dealing with him.
If the owner is unresponsive to requests over the phone, try sending him a formal letter. If that does not suffice, it's best to go and talk face to face. As a tenant, always stay firm in your conversation or while sorting out any issue with the landlord.
Before taking a place on rent, ensure that the toilet and the kitchen fixtures are in good condition. In case they aren't, get them fixed before moving in. Most landlords create a fuss over getting them repaired and may even ask you to get it done.
There have been many instances where the tenants become a gullible victim at the hands of the landlords. They often find themselves in situations where they are not able to fight back. In such situations, it is best to know the legal provisions beforehand.
It is advisable to have a clear clause in the rental agreement stating that the initial deposit would be paid back by the lessor to the lessee at the time of vacating the house.
The contract made in the rental agreement between the owner and the tenant is for a fixed period and increment in rental amount is also defined in the agreement. The agreement should clearly mention the percentage of increase of rent after the stipulated period.
Before moving into a rented house, a tenant should sort out as to who would do the minor and the major repairs. It is better to put this aspect down in the rental agreement.
A tenant should check that the electrical, water, drainage and other fixtures are in order. If it is not so, you must try to take pictures in order to have proper documentation. Any existing damage to the property should be clearly listed in a separate note signed by both the parties.
In case required a police confirmation of the antecedents of the landlord can be obtained to avoid getting into avoidable hassles at a later stage especially if the landlord has criminal records.
Taking up a house on rent comes with several hassles. Hence, to avoid issues in the future, you must have clear documentation and legal papers before moving into the place. Keeping the arrangement legal and documented helps avoid unnecessary problems both for the landlord as well as the tenant.
Express tips: Dealing with tough landlords - Indian Express
A ‘rental agreement’ is critical in order to avoid disputes between the owner and the tenant at a later stage. It defines the duties and responsibilities of both the parties involved.
As per the Registration Act 1908, all rent agreements for tenure of one year and above have to be legally registered. Being a legally approved document a registered agreement holds higher evidential value compared to a non-registered one.
Usually in order to avoid the payment of the stamp duty and registration charges most landlords go for a lease agreement of 11 months which can be renewed on termination.
At the same time in order to avoid paying tax on the rental income most landlords try and avoid signing a formal agreement. But in order to safeguard his rights a tenant should never take a house on rent without signing a formal rental agreement. For a tenant it's also a legal document which acts as a proof for tax benefits along with being a valid address proof when applying for a passport or PAN card.
Also, a lot of times landlords take the tenants for a ride and make agreements favouring them. Often the clauses are dressed up in complicated legal jargon. Landlords also use readymade agreements downloaded from the Internet or purchased from a vendor outside the court.
A tenant not vacating the property on the termination of the lease tenure is not an uncommon scenario. In such a scenario a landlord either goes to the court which may take years for resolution or he resorts to other alternatives like harassment.
The essential elements of a lease are:
Parties involved — Lessor and Lessee,
Terms/ clauses of lease,
Rent and security deposit,
Duration of lease
For general understanding a ‘lessor’ is the person who transfers the property or in most cases the owner or the landlord and 'lessee' is the person who accepts the transfer of property or in most cases the tenant.
Security deposit is usually equivalent to rent for two or three months. With increasing incidents of tenants hampering the property now landlords have started charging more amount as security deposit. But while demanding high deposits landlords are usually ready to negotiate.
A landlord not returning the deposit or giving only a part of it is also a common trend. While signing the agreement a proper receipt should be demanded for the same along with inclusion in the signed agreement.
A rental agreement is a significant document which safeguards the interests of both the landlord and the tenant. Therefore, it should be signed only after thorough study and analysis of the impact of each clause.
-When registering a rent agreement the effective date should not be prior to the date on the stamp paper
-A tenant should verify the title deed and ensure that the owner has the lawful right to let out the property on lease or a provision may be incorporated to make the owner admit that he is lawful
-It should specify the rent amount, delay clauses, provision for hike if any
Mode of payment of rent
-The amount paid as security deposit, lock-in period if any and the procedure of its refund when the lessee vacates the property
-It may specify that the lessor should pay all statutory levies to the respective authorities from time to time
-It should specify the person responsible for paying the electricity and water bills - if these are paid by the lessee then he should provide proper receipts to the lessor for his records
-It should specify duties and obligations for both the parties like the owner has a right to inspect the property but during reasonable timings or only after appointment, tenant can't sublet the property or use it for commercial or any illegal work, procedure for repair work
-It should clearly mention the termination clauses for the agreement like tenure, notice period duration, lock-in period if any
-Forced Major Clause - eviction in case of act of god like earthquake, floods, storm
-It’s advisable to state arbitration provision to resolve disputes
Understand your rental agreement well
Rental agreements are more or less similar all over the country. It mentions various terms of the agreement, which include:
* Amount of rent to be paid every month
* The amount of safety deposit to be paid to the owner on a return basis
* Period of rental agreement
* Number of people occupying the property
* Type of lease – residential or commercial
* Maintenance issues – who will pay the monthly maintenance bills (in case of a property in a housing society), minor repair work charges, major repair work charges and so on
* Termination of lease rules
The rental agreement in India has been designed well to protect the rights of both the lessor and the lessee. Other clauses may be added in the agreement as per the discussions between the two parties.
Lease Agreements & Deposit
Apart from being drawn up for commercial and residential purposes, there are three types of rental agreements based on the duration of the lease:
* Week to week
* Month to month
* A fixed term, not be less than six months or more than 12 months.
The duration of the notice period prior to the termination of the lease depends on the period of the agreement. Once signed, the landlord needs to give the tenant a duplicate copy of the agreement within 10 days of signing or the tenant may withhold the rent till they receive the copy.
The safety deposit amount to be paid for the duration of the lease may be negotiated. Technically, the safety deposit amount is calculated as the first three months' rent which is fully refundable subject after the amount of repair and maintenance deductions the landlord has to make. In practice, however, if the landlord is charging a higher amount of deposit, then the rent amount will be lower and vice versa. The deposit amount has to be refunded within a month or the tenant may charge an interest on the amount that is computed on a daily basis.
The Tenant's Rights
The Indian rental agreement provides ample security to the tenants. Once the tenancy commences, the landlord is not allowed to infringe upon the tenant's privacy. Although, periodic checks of the property are done to check on the maintenance, the landlord has to give prior information before coming or sending their representatives.
The tenant may also ask for repair work or some other changes to be made to the property if they feel it is absolutely necessary. For instance, a tenant may request installing a grill on the balcony or terrace for child proofing.
The Landlord's Rights
The landlord holds the right to evict the tenants under strict circumstances if they violate any of the terms of the rental agreement. However, a prior notice of at least three weeks has to be served. Also, if the tenant terminates the lease agreement without prior intimation, the landlord has the right to withhold the full security deposit amount.
The rental agreement in India is drawn for a period of 11 months. If both the parties want to extend the lease, a new pact must be drawn a month prior to the expiry of the agreement. Further, the landlord is allowed to impose a 10 per cent raise in rent, which means:
* In accordance with the new rent amount, the security deposit amount may also be raised.
* The duration of the rental agreement may be revised.
The rest of the terms and condition will remain the same if both the parties are satisfied and a few additional clauses may be added as per their discussion.
If the agreement is not honoured by either party, they are free to take legal recourse. The rental agreement has been made flexible so that neither party may be tied down by pre-defined rules in case of exceptional circumstances. The Indian tenancy laws are strict; however, the legal procedure is long and time consuming.
A part of the problem in the system also arises from the subjectivity in the agreement that does not define the terms and conditions very clearly. When an agreement drawn concisely, the tenant and landlord benefit equally.
— The author is CEO, BankBazaar.com
Understand your rental agreement well - Indian Express
Checklist for renting out your house
Though renting out your house sounds like a big responsibility, the payoffs are often large. With a little research and preparation, you could rent your property for a fair price and protect your valuable investment, too. Considering the increasing property values, renting out a place and staying on rent could both help save big sums of money. As renting out a place means additional income, many senior citizens consider renting out a room or two in their flats.
There are various ways to go about this. A look at the factors to consider before renting out your house:
Computing the rent
What you get depends on many factors - the amenities provided, the maintenance fee and demand for the property. After considering these, one would arrive at an approximate rent in that area. Additionally, one can bargain for better rent, depending on the weightage of these factors. In other words, you could ask for a higher rent if your society allows the tenant to use amenities such as gyms, swimming pools, etc. Besides, your broker could easily help you find the current rent rates in your area. However, real estate experts say it isn't always necessary to abide by the broker's word; one should be satisfied with the rent he gets.
"The rent one expects for a residential flat is only two to three per cent of the property's annual capital value," says executive managing director (South Asia), Cushman & Wakefield. A terrace, a furnished flat, a modular kitchen, good wooden fixtures, etc, could help you increase the rent for the flat. If the maintenance fee charged by your society is high, owing to various facilities provided, the rent could either rise or fall, depending on whether the society allows tenants to avail of these. , Advocate at Hariani & Company, says, "These factors can add value to rent, especially in a down market, when tenants are selective because of the increased availability of rental homes and their expectations are much higher."
Background check of the tenant
It is extremely important to do a background check of the tenant before allowing him/her to use your flat. This is because the tenant is also responsible for keeping your flat in good condition. To be safe, it is best to check for minute details of your society and its by-laws. For instance, some housing societies deny tenancy based on a person's eating habits or his/her marital status. Real estate experts say tenancy can be denied only if the qualifying conditions are stated in a society's by-laws. One should also check important details such as the tenant's current job, the contact details of family members and the number of people who would occupy the house. Also, keep a photocopy of his identity proof and verify this with his previous landlord.
After you find a tenant, you have to prepare a 'rent agreement', with the broker's help. The broker would also help carry out tedious errands such as the tenant's police verification and registration of the lease agreement. Police verification and registering the agreement could take up to eight-10 working days each. One cannot rent out a flat without completing these formalities.
Research and advisory services director at Knight Frank, says every city has a pre-planned rent agreement. "Since documentation takes time, one should keep this ready as soon as he/she decides to rent out his apartment," he says. Ideally, the tenant is expected to pay only the electricity bill of the house; property tax, maintenance, stamp duty and registration fees are to be borne by the flat owner. The deposit money, the rent payment mode, the type of agreement, the description of property and the tenure of stay are a few things the agreement should contain. The facilities the tenant is liable to pay for should be clearly mentioned in the agreement.
Checklist for renting out your house | Business Standard
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