Renting out your property is a major step. It’s a financial decision that can create steady income when managed correctly. But it is extremely important to take care of the legal formalities before taking this important decision. If you choose to ignore these essential steps, you can end up in major legal disputes, complications, or loss of wealth too. Especially if you are a first-time landlord, it’s important to follow a systematic process. Here are five important steps every homeowner should take before renting out their property. Check them carefully:Create a property perfect for rental useThe first step is to make your property rental friendly. It means the house you plan to rent out should be comfortable, welcoming, safe, and presentable. A property which is well maintained attracts better tenants along with fetching good rent. Check all the electrical wiring and plumbing systems are working properly. The gas connections should be checked. Any signs of leakage and dampness repels renters. Installing essential safety measures such as smoke detectors and fire extinguishers is strongly recommended. A freshly painted house with clean floors creates a positive impression. Therefore, landlords should document the before and after pictures or videos of the property.Tenant verification/police verificationTenants are strangers. Therefore it is extremely important to get a proper screening done before saying yes. Else in future, there may arise problems such as delayed rent, property misuse, or legal disputes. Landlords should verify the tenant’s identity. Check the government-issued ID cards, get the police verification done and confirm their employment. Also checking previous rental history can help. Get references and check with them. It can help in understanding the behavior and payment habits of the tenant. So background is non-negotiable to avoid future disputes.Draft a clear and legal rental agreement (Rent agreement)A legal rental agreement is another non-negotiable deal. There have been several fraud cases in the past and most of them had no legal rental agreement. A written rental agreement is the proof and also foundation of a secure landlord-tenant relationship. It defines the rights and responsibilities of both parties protected by the law. The agreement should clearly mention the tenure of the lease, monthly rent, security amount, due date, and penalty, if any. At many places, rental agreements are a must. Manage financial aspects Handling financial matters in a systematic manner is also important. It helps in maintaining a healthy rental arrangement. The security deposit should be collected as per local regulations and should be accepted with a receipt. Landlords should issue rent receipts for every payment. Clear guidelines regarding payment of utility bills, maintenance charges, and minor repairs should also be established from the starting. Legal and administrative obligationsLandlords must comply with legal and administrative requirements to remain protected under the law. In many cases, police verification of tenants is not done which is not right. So it is strongly advised. This step adds to security and protects landlords from any legal issues. Along with this, rental income must be declared while filing income tax returns. So landlords need to understand that a house on rent is not just a financial asset but a long-term investment and responsibility is huge. Understanding legal implications is extremely important for both tenants and landlords. By following the above-mentioned steps properly, landlords can minimise the risks and maintain good relationships with tenants.
