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The Indian rental market, over the past years, has witnessed double-digit growth, owing to increased migration to urban areas, because of job opportunities. Consequently, there is a huge opportunity for real estate agents to make the most of this demand and to grow their businesses. Although the commission earned as a broker for a rental property is not much, as compared to the commission earned in buying and selling properties, the leasing market is evergreen, especially in the big cities where people move in and out in almost every 11 months. Moreover, it is easier to rent out a house and finalise the deal quickly, as compared to sale transactions. Hence, rentals can help brokers to maintain a healthy cash flow for business growth. However, a broker should know certain things, before entering this segment.
Mandatory police verification
It is mandatory in most Indian states, for landlords to undertake a police verification of their tenants. Therefore, it is important for the agents to ensure that the tenant is ready to submit his/her documents, on the request of the landlord, for this mandatory process. Being an agent, you should also enquire about your client’s background, to verify the credentials furnished by him. Since you are introducing your party to the landlord, it is your moral responsibility to entertain only trustworthy clients who are genuinely interested in renting a property and not people who may create trouble later. Dealing with shady clients can dampen your reputation in the market.
Drafting the rental agreement
Usually, landlords insist on 11 agreements of 11 months, as it does not require to be registered with the notary, thereby, saving on stamp duty and registration charges. Being a middleman, property agents are sometimes expected to prepare a draft of the rent agreement. Many rent agreement sample formats are available online, which one can use, for preparing the draft. Otherwise, you can also prepare the rent agreement online through Housing Edge and e-stamp it instantly, which can be signed online by the landlord and the tenant.
Clarity about security deposit
In cities like Mumbai and Bengaluru, landlords charge high security deposits from the tenants, which is either refundable at the end of the tenure or deductible against the monthly rent. Being a property agent, you have to communicate the security deposit amount clearly to your client and the landlord. Also, mention this in the rent agreement, after discussing the same with both the parties, to make it binding.
Obtaining the brokerage fee
Property agents in a rental market earn brokerage from both, the landlord and the tenant. The brokerage fee is usually equivalent to the monthly rent of the property but negotiable to 15 days’ rent. There is no set rule and you may decide your own rates, depending upon the location, property requirements and the landlord’s particularity about the tenant’s profile.
RERA registration for brokers
If you are planning to expand your business to buy-sell transactions, it is important for you to get a license from the state’s real estate regulatory authority (RERA), as it will add to your credibility in the market and among your existing clients, who may decide to opt for home-ownership in future. You would want them to retain your name and credibility which is only possible if you prove that your service is trustworthy. Your RERA ID can be a landmark for your business growth.
See also: All about RERA for real estate agents
What to know before renting a flat?
Know how much to pay as the security deposit. Read the agreement carefully and prepare for the moving day.
Should I use an apartment broker?
Yes, you can use a broker to find an apartment quickly.
What is the best way to advertise a rental property?
You can list it for free on property portals.