The owner should ensure that all reasonable precautions have been taken to ensure that he will in fact regain possession of the flat. An overall checklist for people interested in renting out their property to shops, offices, departmental stores, etc. is given below:
- Ensure that the agreement contains a clause forbidding subletting.
- Even though shorter term lease agreements are safer, a longer term agreement may be more practical. Even commercial tenants prefer a longer term deal.
- Notice period for either side must be specifed. In fact, it may be possible to get a letter from the tenant that they will vacate the rented property at a specified date.
- If you are renting the place to a foreigner or a foreign company, you are required to register the fact with the police commissioner. This is done by filling the prescribed form and paying a small fee. Non-compliance invites prosecution.
The landlord requires the premises in order to carry out any building work at the instance of the Government or the Delhi Development Authority or the Municipal Corporation of Delhi in pursuance of any improvement scheme or development scheme and that such building work cannot be carried out without the premises being vacated.
Repossession
When you take back the possession of your flat at the end of the period of the tenancy agreement, you should check the condition of the flat with a magnifying glass. Normal wear and tear is bound to have taken place, but verify that has been no major damage or structural changes undertaken by the tenant.
Only after you have checked that everything is in order, and no damage has been done, should you return the deposite. You should also check that the tenant has paid electricity and phone bills for the period of his tenancy. If not, you can deduct this from the deposite.
Tax implications
There's no getting away from the long arm of the Income Tax department. If you make money on the deal, you must pay your dues to the Government of India. Some of the things you should know:
- Simple rent is considered a part of Income.
- If there is a deposite involved, the income from the investment of the deposit amount is taxed.
- If there is advance rent, the entire amount is considered income in the given year.