Tips for tenants to do background check of landlords

The demand for rented properties often sees a significant increase in areas close to employment or educational hubs. Landlords look out for quality tenants to ensure steady rental returns in the long term. Tenant verification is mandatory in many states based on specific rental laws. This is required from a safety point of view as it protects the landlord from fraudulent activities, unauthorised property transactions and legal disputes. While landlords face the risk of fake tenants, prospective home seekers looking for rented properties also face the risk of property-related fraud. In India, there have been several rental frauds involving fake listings on property portals, scammers posing as landlords, etc. This highlights the need for potential tenants to conduct background checks on landlords. In this guide, we bring tips for prospective tenants to select the right landlord when renting a home.

Importance of verifying landlords before renting a property

In India, there have been numerous cases of tenants facing rental scams by fraudsters. Fraudsters create fake rental listings of properties on popular online portals to entice potential tenants. They often ask for advance payments of large sums, usually through fake QR codes and later dupe them. Verifying the background of landlords, involving the verification of property ownership, secures the tenant against potential fraud or legal issues.

#1. Verify property ownership documents

One of the essential ways potential tenants can prevent themselves from getting into any legal trouble or fraud. Some of the property documents that one should check when renting a property include:

• Title deed: This document contains details related to the property, buyer and seller details, property history, etc., establishing the rightful ownership of an individual over a property.
• Occupancy certificate: The occupancy certificate proves that a property (building) conforms to the national building codes and is fit for occupancy.

#2. Inspect the neighbourhood and property

When renting a property, a home seeker should inspect the neighbourhood to ensure the availability of essential amenities, connectivity and safety of the area. During this stage, prospective tenants should consider approaching the neighbours or current tenants and ask key questions about the landlord and the rented property. They can also check if there are any potential issues related to the property and look for red flags like disputes, poor maintenance or structural problems in the property, unfair charges, etc. This will help them make an informed decision.

Potential tenants should inspect the property to find any structural defects and request the landlord to take corrective measures before the start of the tenancy. Further, they should check if the property complies with the safety standards and local building regulations. For example, if a balcony is modified into a room, the tenant should check if it has been done after approval from the relevant authority.

#3. Assessment of landlords based on legal compliance

When renting out a property, landlords are required to share key details with potential tenants. This may include any unpaid utility bills by the previous tenant, any structural defects or issues with the property, legal disputes, etc. It is crucial for a property owner to settle these issues before renting out to avoid problems later.

Moreover, a formal rental agreement must be signed between the landlord and the tenant, including all the terms and conditions mutually agreed upon by both parties. The document should include the rent and security deposit payable, frequency of payment, rent increase, maintenance responsibilities, notice period, termination and eviction clauses. This will protect the interests of both parties and prevent disputes. Further, the rental agreement must be registered if the tenure exceeds 11 months. Tenants should look out for any hidden clauses and understand their implications.

#4. Assessment of landlords based on transparency

Prospective tenants look for honest landlords. So, they must check the landlords’ responsiveness and transparency when it comes to matters like repairs, bills, pest infestations, etc. and answer key questions.

If the tenant feels that something in the property does not match the description shared by the landlord or is inaccurate, it could indicate possible issues with the property that the landlord might be hiding. Further, potential tenants should be aware of scams where landlords do not allow tenants to physically visit the property or when owners ask for large upfront payments.

Prospective tenants should ensure the landlord shares their contact details so they can reach out with any questions before the agreement is finalised. It could be a red flag if the landlord is unwilling to share the contact details or does not respond to calls.

#5. Address money matters

Prospective tenants should get clarity on key money matters when finalising a lease agreement. This includes the rent amount based on the negotiation and mutual agreement, the method of payment, the due date by which the rent should be paid, the security deposit, etc.

In many cities, several property owners prefer to take rent payments either fully in cash or partly in cash and the remaining through cheques or online transfers. This could pose issues for a tenant at the time of filing tax returns. They could get an income tax notice and their House Rent Allowance (HRA) could be rejected. For every HRA claim, the landlord could have a corresponding taxable income. However, if the landlord who is taking the rent in cash does not disclose this for income tax, it could draw the attention of the income tax department and pose issues for the tenant. Landlords mostly take cash payments to receive rent so that the amount is not reported in income tax returns.

When renting a property, potential tenants should check such potential problems and make an informed decision.

Housing.com News Viewpoint

Just like property owners look for reliable tenants for their property, prospective tenants also look for trustworthy landlords to prevent potential fraud or legal issues. To avoid a bad renting experience, tenants should verify key things, including property ownership, rent payments, and related aspects. If they sense any red flags, it is better to consider another option.

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