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Almost two years ago, Suneel Padale, 36, a development professional, moved to Delhi from Bharuch, Gujarat, on an assignment. Initially, he stayed with his friends and he acted quickly on their suggestion to look for a house in Mayur Vihar Phase-I. He visited the area and liked it. With friends and newspapers disgorging details of property agents in the area, the house search started.
He was, however, disappointed at the results, as most of the apartments that he checked did not live up to his needs. He stuck with the location in spite of that. Finally, he moved into one that he liked. But, eventually, it turned out to be a sour deal as, Padale says, "The landlord wanted to sell his house and in the intervening period he wanted to get some rent." For Padale, the search process began again.
Happy House Hunting D-I-Y
This time, however, he changed his strategy. During his stay he had acquired some new friends, in particular, older residents of the area. From them he took references of property agents. "These agents had a larger supply of flats as compared to the earlier ones," says Padale. Still, it took two months before he found a flat. He summed it up wryly: "The experience is quite painful and time consuming."
The demand. Painful indeed, is the process, especially if you are searching for a house in the April-June period as a lot of job openings are created then. Also, campus placements of most business schools usually ends around that period.
"This adds to the demand for rental properties; primarily, this demand is created in the Rs 5,000- 15,000 bracket," says Prashan Agarwal, business head, www.allcheckdeals.com, India's first, online brokerage for residential real estate.
The effect. It is now established that sales volume of ready-to-move-into properties has taken a beating. The main reason behind this fall is the high cost of real estate, with credit becoming costly. The outcome of this is that many people are effectively postponing buying their dream home.
As a result, this has driven the demand for properties on rent to move upwards. "In the last 6-12 months, rentals have risen, on an average by 15-20 per cent," says Agarwal. For rents to stabilise or fall, volume of property purchase transactions needs to move up. With that not happening, at least in the short-term, rentals will continue to move up. Against this backdrop, if you are rent-bent, you need to look at a few things.
The location. The first step is to zero in on the locality. Then find out the regularity of both the water- and electricity-supply. Check the distance to your office, local markets and other amenities like schools and hospitals. Also, go through the property portals to get an idea of what is the fair rent for that locality.
The agent. Get in touch with the property agents. You could also sound out your office colleagues, in case they are planning to rent out their property, or if they know someone who is willing to do so. This makes sense as, by getting rid of the agent you save on brokers' fee, which is typically a month's rent.
If you are not that lucky, start short-listing agents. If you know people in the area, take references from them or else check out the classifieds. Bigger property agents usually publish many advertisements for different properties. You can also visit the property portals. Zero in on the agents who have the largest supply.
Once you have identified the broker, visit the office and check if he has a permanent address or not. "A service tax registration indicates that the broker takes his business seriously," says Naresh Malkani, CEO, www.indiaproperties.com. Also, ask the agent if he is a member of any local real estate association or a national association. "At the end of the day, you should use your own judgement," says Padale.
The landlord. Once you have identified the property, the agent arranges a meeting with the landlord. There are a few things that you should clarify. Ask him why the property was vacant. "Given that, ask him what plans he has to move into the property or to sell it," says Agarwal.
The rent. In Delhi-NCR, the landlord would generally ask for two months rent as security deposit (SD) and a month's rent in advance. While advance rent is a prevalent practice, the amount of SD varies. For example, in Mumbai and Bangalore you have to pay up to 10 months rent as SD.
The inspection. "One should always take the meter reading of all utility services during pre-possession walk-through. The readings should be attached as an addendum to the lease and signed by both the parties," says Malkani. Stress on the fact that the landlord must get the electricity connections checked before he hands over the house to you.
Ensure that the wiring is earthed properly and that everything else is where it should be. If any doors or windows are warped, get them rectified. Furthermore, check if locks in the house are in working condition and if you find a faulty one, get it changed.
Finally, ask the landlord for pestcontrol and to get the house whitewashed.
The lease. These are of two types - company and personal. Most landlords are comfortable with a company lease. "A company lease protects the landlord from any potential tenancy holdover provisions," says Malkani. But if you are unable to furnish a company lease, there is the personal lease option. "Convince the landlord that you are a person of integrity," says Agarwal.
Whichever option you choose, certain things have to be stated clearly, especially, the duration of lease and the SD. If it's a personal lease for 11 months, get it notified. On the other hand if it's a company lease for more than a year get it registered with the help of a lawyer. "The lease then becomes a legal document that secures your rights as a lessee," says Agarwal. At the end, pressure the agent to complete all the documentation before you actually move into the property.
Renting may not be an ideal solution, but if you pay attention to a few basic issues, then that can well ensure years of living on rent, trouble-free.
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