In this blog, we will talk about the different Property Rental models and types of Rental agreements. The idea is to educate the tenant and londlord about what options are available and what to be wary of. 

Now, before we speak of legal agreement formats, lets see what are the rental models in India today: 

Monthly Rental: In this model, wherein the tenants pay the homeowners a fixed amount every month. In the case of leave and license and rental agreements, homeowners have the freedom to change their rental rate. When it comes to leasing agreements, the rental rate is fixed for a particular period. However, in all these cases, the homeowners receive a monthly rental income.
​
One-pay lease: A single-payment lease is when tenants pay the entire leasing amount upfront, to get rid of monthly payments. At the end of the lease period, which is typically 5-10 years, the parties can choose to do the same once again, or break off their relationship. At the termination, the entire upfront lease amount is returned to the tenant, without interest. Landlords who are business owners usually use this option if they can use the funds in their business, without having to sell the property. Tenants use this option when they need stability. 

Rental Agreement Formats
Now, there are 2 widely known standard rental agreement formats - Leave & License agreement and a Lease Agreement. While the One-time lease can be signed using the Lease agreement, there are 2 options for those use in the Monthly Rental Model:

Lease Agreement:
In the lease, the landlord and the tenant mutually agree to fixed terms and conditions, such as the rent, rules regarding pets, and duration of the agreement. Neither party can change the agreement without written consents from others. 

Likewise, the landlord can’t arbitrarily force the tenant to move or raise the rent since it would be violating their contract. Hence, he or she has to wait for the expiration of the lease agreement to negotiate. So the lease offers more long term security to both parties. Such contracts last for a fixed period of time, usually between six to twelve months, and it binds both parties to the lease. These contracts also clearly define the expectations of both parties, helping to protect the best interests of both. 

As per Section 105 of the Transfer of Property Act, lease agreements serve as contracts between the lessee and the lessor regarding the right to possession of a property. They tend to be both transferable and heritable. Also, they are not affected by the sale of the property and lasts until the date of termination. 

Leave and License Agreements
A Leave and licence agreement grants an individual a right to do something within a property for a set duration, activities which in the absence of a license might be considered unlawful. However, this does NOT give the party an interest in the property, as they only have the right to use or occupy the premises. Such licenses come under the Indian Easement Act. The main difference being exclusivity of possession. In case an agreement gives an individual exclusive right to possession, it is a lease. If it only gives the party a right to use the property for a certain purpose or in a certain manner, then it is a License. 
A Leave and License helps solve both eviction and rent-pricing problems and take place between a licensor and licensee. Also, as they do not lead to any transfer of duties, responsibilities and obligations, changing these agreements is very easy. Unlike lease agreements, they do not give the tenant any inheritance or trader right. Also, these come to an end if a property is sold to someone else. Furthermore, it does not require the sending of any notice period, but most licensors end up doing so to make the process fairer.

At PropertyAngel, we use only the Leave & License agreement for all our tenants, as that is most hassle-free. 

How Do You Know If You Can Trust Your Property Management Company?

​Here’s a quick look at some of the factors you need to consider before choosing a company to manage your property


1. Does the company have the right to sublet your property? If a management company’s model is to sublet your property, then they can place tenants without your approval, giving them much more control than what is necessary.

2. How much deposit do they plan on taking from the tenant? A good management company knows that the security deposit should cover damages and rent arrears. This could amount to about six months of rent. If the company takes a deposit worth only 2 or 3 months’ rent, you need to be careful because this amount will not be enough in case the tenant causes damage to your property.

3. Who controls the deposit money? If the property management company wants to keep a significant share of the deposit, then you need to be careful. Make sure that you talk to them and retain a majority share of the deposit, to have more control over proceedings.

4. Does the company allow you to take part in the tenant selection process? If the company refuses to have the tenants approved by you, then that gives you very little control over your property. Make sure that you have enough power to veto tenants that you feel can be tough to handle.

5. Does the company share tenant information with you? Even if you allow the management company to find tenants for you, you need to ensure that you have their contact details. In case things go south with the company, you should still be able to communicate with your tenant, and smooth out any issues they may have.

6. Does the company run all the expenses by you? In case the company spends money on the property without your approval and does not send the records over to you, you need to be wary. A good property management firm will always run the financial records by you and get your approval.
 
Some companies will promise to get you a guaranteed rent every month. However, it would help if you accounted for the fact that in certain circumstances, that might not be possible. For instance, the COVID-19 has brought out so much uncertainty, the best way to protect yourself is to minimize risk and maximize control over your property.

​The purpose of this guideline is to safeguard your interests and help you understand how you can keep your property safe as well. We recommend you go through these guidelines before choosing a property management company and reduce the chances of issues cropping up.

​Rupee Takes A Hit
In recent months, the rupee has been witnessing a fall against the dollar due to various reasons. This has helped non-resident Indians scout for properties in their homeland to settle down, and use as an investment. The past few years had been quite sedentary for the residential real estate market in India. However, all of that will soon change due to NRIs from around the world, considering India as a haven for themselves. Lack of transparency, fear of corruption, and safety issues were holding NRIs back in the past when it came to Indian real-estate. Studies show that those trends are now changing.
 
RERA Improves Credibility
The enactment and implementation of the RERA have helped the real-estate industry better its reputation. The RERA ushered in a new era of transparency, credibility, assurance, and consolidation. All of these have helped the market look more lucrative to NRIs from around the world. The weakening of the rupee has turned India into a substantial market for overseas real-estate investments. Studies show that over 30 % of NRIs want to invest in properties, and that percentage is increasing year-on-year.
 
Why NRIs Should Consider Real-Estate as an Investment​

• Price correction in the last few years allows NRIs to leverage their power of additional income as a result of currency exchange
• Momentum regarding the popularity of properties in Tier-2 and Tier-3 cities are picking up.
• NRIs no longer have to look for highly expensive properties in just Tier-1 cities.
• The rate of appreciation for such properties has increased as a result of fast infrastructural development.
• Such investments give good returns, as they can be rented out as well. The rise of the property management industry in India, gives them further assurance that their assets will be safe and secure.
• Rise in communal issues, and the fall in the economy in several countries are pushing NRIs to return home.
• The fall in rupee prices and a sluggish market ensures NRIs better prices when they buy properties in India right now.
• The COVID-19 has laid bare the fallacies and problems that several developed nationals have, leading Indians to want to return home in the long run.

RERA has brought in a lot of accountability and credibility into the Indian real estate sector so that NRIs can be more assured.

​The COVID-19 Impact
The COVID-19 has led to the disruption of life in almost every country in the world. It has also led to the rupee falling and the rise in the form of the Indian real estate market. Due to the COVID-19, NRIs are coming into the Indian Real Estate scene due to its emergence as a risk-averse investment option. This global pandemic has renewed interest in residential properties in Bangalore, Hyderabad, Pune, Noida, and Gurugram.
 
Furthermore, due to the chance for good capital appreciation, NRIs are also buying commercial spaces now. The COVID-19 has also allowed NRIs to negotiate good deals and even land ready-to-move-in propositions. If that wasn’t enough, banks are low handing out home loans for as low as 7.15% interest rates. Real-estate experts also believe that the COVID-inspired lockdown has led to the rise in the popularity of technology-driven home buying in India. Virtual real-estate sites are now successfully doing virtual tours, closing deals, and negotiating terms like never before. This added with the fact that most States are trying to bring in e-registration of property documents will make it possible for NRIs to buy their dream homes at least hassle.
 
Why PropertyAngel
However, while buying homes has become easier than ever before, maintaining them is of the utmost importance. NRIs tend to face difficulty in the maintenance and upkeep of their property, as they live far away. However, the presence and collaboration with good Property Management Companies will change all that. Clients will no longer have to worry about issues like;

1. Illegal Occupancy and Squatting
2. Tenant Search
3. Tenant Screening
4. Tenant management
5. Paperwork such as rent agreement
6. Utility Bill Payment
7. Compliance for Taxes and other legal issues
8. Property inspection
9. Repair, Maintenance, and Upkeep
10. Renovation Issues
11. Leasing and Registration of Property
12. Periodical Reports
13. Return on Investment

 
People who have large real-estate portfolios find it challenging to manage all those properties when they live so far away. That is where PropertyAngel comes into the picture. These companies leverage their knowledge of the industry and local areas to maintain and manage your property to ensure you get the highest returns. It is difficult to handle all the compliances, paperwork, legal issues, and tenant search when NRIs come home for a month in a year. Therefore, PropertyAngel takes that burden off NRIs by doing it most efficiently and effectively.
 
These PropertyAngel professionals will take care of the property, resolve tenant issues, and supervise the property. This ensures that your property investment remains secure and generates the required income for you. Constant supervision also eliminates the risk of encroachment and illegal occupancy, both of which are serious threats now. So, join hands with us to bypass the cumbersome task of managing your property and ensure you receive the return on investment you always needed! We simplify the tiresome process of managing your property to focus on the more important things in life.
 
 Authored by: Dhivya Naresh

​​From the very start, the year 2020 has brought with it one of the most challenging issues the world has faced in recent years. For the past few months, the world has been facing numerous adverse effects of the coronavirus pandemic, which has had a devastating effect on the Indian economy as well. India has been under a nationwide lockdown since March 25th, 2020. Now, as India moves to its fifth stage of the lockdown, the number of people infected by the virus continues to rise at a rate higher than ever before. As of June 4th 2020, there are over 220,000 COVID-19 cases and over 6300 death in India (World O Meters). The regular lives of the majority of Indians have been completely disrupted.
 
The population demographic of the country that has the most significant influence on these changing trends are the millennials and youngsters. This population includes students and young working professionals. They not only comprise one of the most prominent sections of the population, but they are also the trendsetters of the nation. They influence the way we eat, shop, commute, and live. Most of these people leave their homes and go to cities for their work or education. This trend had given a rise to the “Co-living” industry, which largely comprise of dedicated apartment communities for single professionals, with are fully serviced with housekeeping, social infrastructure and is largely a hospitality solution. However the covid-19 pandemic has created havoc in this space, and many of these communities are now empty.
 
Here are a few key factors that are contributing to this:  
 

• Work from Home – Many Corporates have offered indefinite work from home options to their employees, as many are yet to figure out how to manage the safety precautions and logistical issues in the office premises when the employees return. As remote work becomes the norm, many of the young professional migrants, have returned to their hometowns.

 

• Corporate Downsizing – With the economy on the verge of collapse, many companies have shut down and corporates have been downsizing. The youngsters with nowhere else to go, and a bleak future ahead, have been returning to their homes, in anticipation of better times.

 

• Safety Hazards – Today, tenants value clean, well-maintained, and safe living spaces more than ever. These young professionals and their families are also worried about them staying in a large community in such close proximity with a larger crowd and so much shared infrastructure. Many of these co-living solutions are yet to upgrade their facilities to adhere to the required sanitation and social distancing norms.

 

• Financial woes – With so many of the inhabitants vacating the premises, many of these co-living solutions are no longer able to afford rent to their landlords. Several have shut shop and several others are battling financial nightmares.

 
Industry experts believe that once these young professionals start returning to their work cities, they will not return to these PG buildings and co-living communities, and instead will move to more organized apartment complexes, with independent units which they can share with their own friends and family, such as those offered by PropertyAngel, Nestaway and other such property management providers.
 
In the times of such crisis, flexibility is the key. PropertyAngel offers the perfect solution for people who want to live in clean, safe and well-maintained homes with their friends and colleagues. We believe that post the coronavirus crisis, a new trend will emerge in the real estate market, and we are here to make it easier for you to transition into this trend smoothly. 

​Most of the homebuyers in India belong to the working class category. The pandemic and the possibility of a recession has left many potential buyers unsure of their jobs. This is bound to negatively affect their property buying decisions. Many may not be able to decide to take the responsibility of an added liability and the burden of EMIs after buying a new property with such high levels of uncertainty around their livelihood.
 
In the meantime, we can expect to see some spike in developers opting for launches digitally. This will allow customers to book site visits online where they will be able to choose specific time slots to avoid crowding and maintain the necessary social distancing. The government advisory to avoid any kind of social gathering is certainly going to impact the number of site visits and thus overall housing sales as well.
 
However, there is a silver lining for rental property owners in this entire situation. This is especially true in major metropolitan cities like Bengaluru and Mumbai where PropertyAngel primarily operates. 

​THE SILVER LINING FOR RENTAL PROPERTY OWNERS
 
The rental apartment industry is now preparing to deal with tenants who may lose their jobs and may be unable to make the current and coming month’s rent. A large number of tenants have already asked for forbearance in April and May, and more will in June. Landlords will seek to emphasize retention, which will mean giving tenants some leniency in the near term. There will be downward pressure on effective rents in the next few months, and property owners will be asking their lenders for forbearance as well.
 
Although the rental apartment industry is now dealing with tenants who have lost their jobs and may be unable to make the coming month’s rent, the long-term outlook for rentals is still very bright, however, in light of demographic shifts that are still unfolding. This is especially evident because of the aforementioned points. Given the fact that the potential buyers have no choice postponed their purchasing decisions; rental property owners will not see a decrease in the number of tenants in the foreseeable future. In fact, there is a good chance that rental property owners will see an increase in the number of tenants. One of the main reasons for this is that the people that have bought a property still do not have the possession, and probably will not be receiving it any time soon. One of the major reasons for this is because of the mass relocation of construction labourers in the past two months back to their villages and homes.  Project completion has become a problematic endeavour and seems impossible at the moment.
 
The single-family-built-for-rent business might be a long-term beneficiary as well as we may possibly see a shift toward larger units that better accommodate working from home getting rented by families allowing more space for a home office or office nook. This is especially true for families that have members that work in the IT industry in cities like Bangalore, Mumbai, Pune, etc. List your property at PropertyAngel to help you choose the tenant you want to rent the property to.

​CONCLUSION
 
With the number of enquiries slowing down, share market being impacted and generally slow economy due to the global pandemic, a massive impact across all the housing segments in the real estate industry is inevitable. The outcome of this pandemic on the real estate industry, while loosely predictable, is still largely very uncertain. While the world is yet to know the outcome of the pandemic and how well the country would emerge from the current situation; taking care of your rental properties with PropertyAngel is never a bad idea. List your property on PropertyAngel to find the most suitable tenant.  

Mumbai, similar to Bangalore, has a significant number of NRI investments. These increased drastically as the city expanded. With properties belonging to absentee owners, arose the need for professional property management, and a few players sprung up. Besides PropertyAngel, the others to note who are serving this market are PropertyProctor, Azuro, Simplelease among others. 

Here is a lowdown on the way most management companies in  the city operate:

Service List:
Some management companies, like us - PropertyAngel - provide pure management services. We do not do sales or other commission based services. However, several companies in the city provide regular brokerage services alongside. Understanding this difference will help you gauge the level of professionalism in management, as well as focus that you can expect. 

Scope of Property Management: 
The general scope of property management includes:

• Inventory management, which includes ensuring that the state of the property is completely accounted for when taking the property on from the owner, handing over to any tenant, exiting a tenant, or handing back to the owner. The property should be maintained in the same state, and the responsibility of this rests with the property manager.  
• Tenant management: This includes finding a tenant, verifying their background, negotiating, managing their move-in, renewals, exits, and ensure they keep the property secure and well maintained. 
• Accounting management - This includes deposit, rent collection, payments to vendors, associations, etc, creating a statement of account for every property and ensuring that all receipts and payments are documented. 

Some of the companies provide the entire gamut of services, where as several others provide primarily tenant placement services. It is important to understand what scope of services the company will provide before you shortlist one, and ensure that it matches with your expectations. 

Charges: 
Most property management companies charge a management fee which is usually 30 days of rent per year, with the following difference

• Schedule of Payment: Some charge it as an EMI and ONLY when rent is received. This way the owner has no upfront cost and pays the charges on an ongoing basis only when the service is delivered. However, there are others who charge this as soon as the tenant is placed. The disadvantage is that you have paid the fee upfront even before most services can be delivered, but the advantage is that the rent will have no deductions. 
• Amount of charges: Most companies will charge 30 days of rent, which is equal to 9% on a monthly basis. Some charge 30 days only for placing the tenant, and an additional management fee of 15 days of rent, which is equal to about 4.5% on a monthly basis. 

 
Responsibility & Ownership: 
You should be able to gauge the level of responsibility when understanding the charges. If the company charges primarily for tenant placement, then they act as brokers and the level of professional management you will get will be less compared to a focused provider. However, if the company charges for an ongoing management, and you are looking for more than just a tenant, then this might be your best bet. For example, a good question to ask is who is responsible for collecting rent? If the company collects the rent, then they undertake the additional responsibility of following up with the tenant to ensure payment of the same. However, if they simply collect rent cheques and deposit the same in the owner's account, then who takes responsibility in case of a bounce?  These are important questions to ask upfront.

Who is the customer? 
You would think and expect that for a property management service, the owner is the primary customer. In this case, a good question to ask is whether the company charges the tenant? If they do, then there is a conflict of interest. You want to work with a company that will protect your interest against all odds. 

Property Management is at a nascent stage in India. However, in a short span of time, various business models in this space have spring up, some of them catering to families, and many more catering to bachelors:

• Family/Group Property Management in apartments and villas
  • LANDLORD TYPE: Absentee owners, NRIs, senior citizens, local professionals
  • TENANT TYPE: professional families, companies, groups of professional bachelors
  • PROS: emphasis on property maintenance, tenant verification, larger security deposit, low tenant churn rate/high occupancy
  • CONS: lower rent than single housing
• Singles Property Management in apartments and villas
  • LANDLORD TYPE: local professionals  and absentee owners
  • TENANT TYPE: single bachelors and students
  • PROS: higher rent
  • CONS: higher charges, out of pocket expense to furnish the property, high tenant churn, less security deposit, property damage is a high risk, partial rent when partially occupied
• Community/Single housing in multi-unit buildings
  • LANDLORD TYPE: developers and builders who own multi-unit housing
  • TENANT TYPE: single bachelors and students
  • PROS: full service with hospitality solution
  • CONS: only limited to owners of multi-unit properties.

There are various players in each category above. For the landlord the services they cover include:

• Inventory Management & Maintenance: This includes documenting all the fittings, fixtures and any damages of the same, as well handling, supervising and coordinating any maintenance work in the property on behalf of the owner.  
• Tenant Management: This includes finding, verifying, selecting, coordinating, replacing the tenants. The service provider will usually do an inspection mid-year to ensure all is well maintained, even if there are no tenant complaints.
• Financial Management: This includes collecting the rent on time, making any payments to vendors/service providers/association/utilities, as required and ensuring the landlord receives the rent on time. Most professional companies will give a detailed report to the owner, even if all deductions are pre-approved.

How do you choose the right property management company for you?
While most of the property and tenant management companies provide the same type of service, there can be remarkable difference in the delivery. Here are some guidelines to help you make a choice:  

1. Do you like to have personalized service? If yes, please check if they have an account manager. Try contacting the account manager a few times before you sign up, so you are sure that they are accessible. If this is not a concern for you and you don’t mind being connected to a call center, then no problem.
2. Is the upkeep and safety of your property more important or only the rent? If the former is more important, then check for a service provider that places strong emphasis on tenant verification. Also, ask what the remedy is in case the tenant damages the property.
3. Is the deposit amount collected important to you as a safeguard? If so, ask for what multiple of rent is collected as deposit?
4. Do you want to have control over tenant selection and payments? If so, please ask if the service provider has a liability to check with the owner and get their approval before placing a tenant. Also, does the service provider have a liability to check with the owner before making even minor payments to any vendors, and have they documented this?  
5. Is it important that there are no surprises? Then, please ensure that all charges and terms are transparent and laid-out upfront. Please read the fine lines in their documentation and see if there are any grey areas, and if so clarify the same in writing.
6. Aligned Objectives & Charges – Always choose a firm that has the same objectives as you do – which is to keep your property safe, well-maintained, with maximum occupancy and rent. So, if a company charges you every time a tenant vacates to replace the tenant, then their objectives are not aligned with yours. If a service provider charges you upfront before you start earning any rental income, then also the objectives are not aligned. However, if they charge you only as you earn, then the objectives are much better aligned.  
7. Credibility of the service provider and the team – It is also important to know the credibility of the service provider and the team behind the same. If the company is a private limited company (most trusted), then you can check for the details on the MCA21 government website. You can also check for online reviews and ask for referrals of other clients.  

Thanks for reading and all the best trying to find the right firm. We, at PropertyAngel, are always happy to serve you.  You can also reach us on hello@propertyangel.in or  080-39511301.