Monday, 20 July 2015

Are you going to rent? Know all about tenancy

A broker helps you find out a suitable rented accommodation, makes you meet a landlord; if you like the property, an 11 month rent agreement is ready. Is this all you should know about tenancy? Certainly not. There are many terminologies/jargons that one should be aware of. Those who are renting out the property for the first time should know the different types of tenancies. Let’s start with the basics first.

Who is a tenant? He/ she is the person who pays rent to use or occupy land, a building, or other property owned by another.

What is tenancy? In simple language, it is the period of a tenant's occupancy or possession. This is an arrangement whether by formal lease or informal agreement under which the owner (the landlord) allows another (the tenant) to take exclusive possession of land in consideration for rent, with or without a premium, either: for an agreed period of on a periodic basis until formally terminated.

Who is a landlord? Landlord is the owner a land/property who permits the right to exclusive possession of his/her entire property to tenants or part of their land to another person for a specific period through lease or tenancy.

The four types of tenancies:
Tenancy for Years: It specifies a term for the agreement. It can be one month or one year. The lease terminates automatically at the specified end date without the need for notice by either the landlord or tenant.

Tenancy from Period to Period: It specifies a definite initial time and is automatically renewable unless terminated by either the landlord or tenant. The lease could be from week to week, month to month or year to year. Under this, a lease is renewable indefinitely for a like period of time.

Tenancy at Will: ‘Will’ means by choice. It is based on the whims of the landlord and the tenant. In simple words, the tenancy is in continuation until either the landlord or tenant terminates the agreement. This can be terminated instantly on a notice given by either party. But, usually in practice, landlords provide a reasonable amount of time required by the tenant to vacate the property.

Tenancy at Sufferance: It is a situation where a tenant remains on a property even after his/her lease /agreement has been expired, before the landlord demands the tenant vacate the property. In this case, a tenant is required to meet the conditions of the original lease conditions, including payment of any rents. Otherwise, the tenant can be evicted at any time without notice. The only difference between a tenant at sufferance and a trespasser is that the former had at one time a right to occupy the property. After acquiring the property, you may have to make some changes. This called Tenant's improvements. These are improvement done to meet the needs of and carried out wholly or partly at the expense of the tenant.

Other terms that you should know:
Premium Rent - A rent which is higher than would reasonably be expected because the tenant is particularly anxious to secure the property.

Rent Free Period - An agreed period, usually for several weeks or months, during which a lessee is allowed to occupy the subject premises without payment of rent. This is considered in cases like:
  1. In consideration for the tenant bearing expenditure on such matters interiors or fitting out premises or carrying out repairs or improvements.
  2. To reflect market conditions which favour tenant e.g. Where the space available for letting exceeds the total tenant demand in that area or
  3. By virtue of both cases

Rental in advance: Comprises a lump sum payment to the landlord at the beginning of the lease term, which is thereafter adjusted in equal installments over the lease term against the monthly base rental payable by the tenant. The advance amount generally ranges between 3 to 18 months depending on the city, type, location of property and the period of the lease.

Now that you are aware of the different types of tenancy, the next time you search for a rented accommodation opt for the type of tenancy which suits you the best.

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