From rents to riches

Gone are the days when renting property in India would mean many sleepless nights worrying about whether the tenant would vacate the premises on time. Thanks to recent changes in the rent act, leasing property is not only a hassle-free affair but the sharp rise in tariffs in the past few years has made it a good option for supplementary income over and above the appreciation in value.

“While the earlier rent control act was loaded heavily in favour of tenants, the current leave-and-licence system protects the interests of the landlord and gives quick remedies in case of a dispute,” says advocate Vinod Sampat, who specialises in real estate.

Tax returns

The rentable quotient of an apartment depends on various factors, key among them being the presence of new economy businesses in the city and proximity to office districts. Bengaluru-based realty consultant Arvind Karkera says, “Be it metros such as Mumbai, the National Capital Region and Bengaluru, or tier 2 cities such as Pune, Ahmedabad and Hyderabad, the boom in the IT/ITES sectors has sharply increased the rents of apartments located near office districts.”

Rent potential

He adds that investing in a home with good rentable potential can take care of half the equated monthly instalment (EMI). Citing the example of Marathahalli in Bengaluru, Karkera says that at a cost of Rs4,000 (about Dh239) per square foot, a 600-square-foot one-bedroom apartment costs about Rs2.4 million. “Thanks to the IT corridor nearby, these homes fetch rents of Rs12,000 per month, which is nearly 60 per cent of the EMI on a loan of Rs2 million,” says Karkera, adding that the key is to identify a home in an area with good potential for renting. “The EMI remains the same, but the rent keeps increasing and so does the value of the apartment,” he adds.

Best of both worlds

Some developers are offering rent-linked fractional ownership packages to woo buyers. Unlike the vagaries associated with time share, fractional ownership not only gives tangible documentation and a share certificate, but there’s an elaborate system in place to deal with emerging situations such as maintenance, disputes, financial implications, etc. For instance, Mumbai-based Sterling Construction System (SCS) offers luxury chalets at its Warai Woods project in Neral on a fractional ownership basis.