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Things You May Not Know About Becoming A Property Owner in India

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RakshaBengaluru

New Member
Becoming a property owner in India is a good financial move for those who want to invest in real estate. Property owners are able to take advantage of a wealth of tax benefits while their property appreciates in value and the rental income rolls in.
Still, landlords do face some unique challenges that newcomers to the real estate arena are often not adequately prepared for. Routine maintenance, repairs, and cleaning aren’t all that landlords are responsible for. The landlord-tenant relationship is an extremely complex one that is governed by an extensive and strict set of guidelines.
Most people rent before they buy, and thus most people first experience leases as renters. As a renter, it may initially seem that a lease protects the renting party, but this could not be further from the truth. The rental agreement is actually in place to protect you, the Property owners. All Property owners need to understand this in order to sidestep any potential legal issues down the road. Tenants in Bangalore are given certain rights immediately upon occupation of a property, even if they have not paid any rent or signed a lease. The lease is actually intended to limit tenants’ rights, making it vital that a lease be drawn up and signed before any tenant is given access to a property.
In Bangalore, the Property owners-Tenant code that prospective landlords should study, in addition to other state laws. These laws can greatly affect your property, and is especially true when defining tenancy. As a landlord, you should be aware that anyone allowed to stay on your property for a specific amount of time will automatically become a tenant and be offered the same rights as a tenant. The amount of time varies by state, but it is entirely possible that you could kindly offer your couch for a week only to find out that you have to give your initial guest a 45-day eviction notice. Something as simple as allowing a person to sleep in an apartment and use your common facilities, i.e. the kitchen, can be enough for a person to claim tenancy.
Many Property owners believe they can budget their rental figures, especially if renters pay in cash. Not only is the Tax savvy to these devices, but also it is just never worth the risk. Claiming losses on a rental property for more than a few years is enough to set a red flag on your account and potentially trigger an Income Tax audit. Ultimately, stating your rental income will be financially beneficial if you plan on investing in more rental properties in the future. Otherwise, you may find yourself approaching lenders for an investment loan with a tax return showing only losses for five straight years.
Skipping an expensive credit and background check may seem like an excellent way to save money at the time, but it will only cause heartache down the line. Tenancy applications and background checks exist for a reason. While people may usually seem trustworthy enough, they can also be extremely irresponsible. Instead of skipping standard protocol, you should consider transferring the cost of the application to the tenants. In many real estate markets, tenants will not bat an eye at a reasonable application fee. When looking at credit checks, make sure you look very carefully for any prior issues with landlords and/or evictions. Patterns form for a reason.

Anyone who has faced the terrifying threat of eviction may feel as though it is an incredible power wielded by all landlords. While eviction may seem frightening at first, landlords actually have very limited control over the situation. Evictions need to be officially filed, even if the tenant has stopped paying rent. Once the eviction has been filed, the tenant will still have 30 to 45 days vacate, depending on the local laws. This is 30 to 45 days that a non-paying tenant will have free run of your property and potentially damage it. Furthermore, even after the 30 to 45 days, the landlord cannot take any physical action to evict the tenant. Landlords cannot shut off utilities or change the locks. Instead, you need to consult the legal professional and petition to have the tenant removed. An actual eviction proceeding can go on for months, especially if the tenant chooses to contest it.
While becoming a landlord seems like an intimidating process, those that are willing to tackle the challenge will eventually find themselves raking in significant rewards. Owning and renting out property gives you a steady source of income independent from other employment or traditional investment vehicles, but this income does come at a cost. You need to become extremely well versed on all of the laws and regulations regarding your state and you will need to be extraordinarily conscientious throughout the entire process.
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FWL

Active Member
Historically, prior to recent policies introduced by the Indian government, money laundering and tax evasion have been particular problems in the Indian property market. Is this situation now under control? Is it time for overseas investors to look again at Indian property investment?
 
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Longterminvestor

Administrator
It is all good and well the Indian property market regulations protecting landlords at the moment, but what happens in the future? We have seen similar situations in the UK in years gone by only for the government to change tack and hand over more and more security to tenants. I would be more interested in the long term potential for the Indian market, is it still centred around a small number of well populated areas or is it now starting to spread out?
 
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NumberOneProperty

New Member
If you are talking about property in India then most important thing is its paper.
 
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Jason Scurry

New Member
Buying a residential property is a matter of huge investment. To save yourself from being cheated, you should check certain documents before the purchase.
 
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diyhelp

Active Member
There are many major UK banks that have exposure/contacts in India. Always use a trusted source when investing in foreign lands.
 
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michael1978

Member
I'm sure in recent years real estate in India has grown it's potential but of course I would still be very cautious when investing there and the people I would deal with. It is a beautiful country though, worth investing.
 
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Assetmonk_2021

New Member
If you're a first-time homebuyer, this article will provide you with a checklist of items to examine before making a purchase. This article will serve as a guide for buying a second home or investing in real estate for a second home buyer or real estate investor. To reduce your risk, here are some crucial things to know before buying a home.
  • Budget: You must know how much money you will have each month in order to cover your expenses. Remember that your first home is unlikely to be your last, so prioritize your current property acquisition demands and let the long term take care of itself. You should ensure that the home you purchase will meet your current demands while remaining within your budget. Understanding your family's current primary demands as a house buyer can assist you in making the best option.
  • Location: Take a close look at the site and the surrounding area. It is preferable to try a position close to your city's central business district so that the price is not too costly. The resale value of your house will also be influenced by its location. If you make the right choices, your house may be your finest investment.
  • Rental rates in the area: If you want to invest in a rental property, look for properties in high-rent or densely inhabited neighborhoods. Knowing the average rental rate in the region might assist you in selecting the ideal home and location.
  • Good Resale Value: Resale sale with a high resale value Before you invest in or purchase a property, you should think about its value. When purchasing a home, consumers never consider the resale value. They make the mistake of focusing primarily on a desirable location or the property's budget. If you pick the wrong property or location, your future sales price may always be lower than the other properties in the area.
  • Loan eligibility: Eligibility for a home loan is determined by the borrower's repayment capacity, income, current loans or obligations, and age. The lending firm or bank provides online services such as a Home loan eligibility calculator to determine a borrower's loan eligibility. The maximum loan amount that can be approved varies per bank, as do the qualifying conditions, which may differ depending on bank or RBI restrictions. As house loan rates rise, a borrower's loan eligibility becomes more stringent.
  • Stamp Duty & Registration Fee: Like sales tax and income tax, this is an essential expenditure or tax that the government collects. When making a budget for property purchases and opting to buy a home, you should be aware of the rates and fees that apply in your city. If you want to discover the market value of your home and how much stamp duty you'll have to pay, call the Ready Reckoner to find out where your valuation zone and sub-zone are located.
  • Additional Costs: Even if this isn't your first time purchasing a property, you'll want to hire a team of experts to assist you. Real estate agents, lenders, mortgage brokers, house inspectors, land surveyors, lawyers, and notaries, among others, should be included. Find out how much the annual maintenance fee is. Will there be parking available, and if so, how much will it cost? If your former owner did not possess a car, talk with the society's secretary and request a parking spot.
  • Connectivity: Connectivity is important for increasing the market value of your house or recruiting renters. Check to see if the property is in a decent location with adequate connectivity. Investing in a property that is convenient to and from places such as the airport, railway station, bus stations, and other points of interest is desirable and encouraged.
  • Neighborhood Amenities: There are the standard factors of location, pricing, and layout when looking for a new house. One of the most crucial factors to consider when purchasing a home is the neighborhood amenities. Include the closeness to schools, hospitals, banks, retail complexes, restaurants, entertainment facilities, and parks in your list of amenities.
  • Peak-hour traffic: Some regions or neighborhoods in a city are notorious for traffic jams, and working professionals or renters strive to avoid them. Drive past the property during rush hour to get a sense of the area at various times of the day and week.
  • Builder research: There are several questions a home buyer should ask a builder. You will be happy at the conclusion of the process if you know or interact with your builder. Buyers should also do their homework and check out a developer's track record. Request a copy of the project's designs that has been stamped by the local authorities to check that the builder is following through on what he has promised. Some alterations to the original plan are permitted by the developer.
  • Property insurance: Property insurance protects your financial future in the event that specific losses to your property occur. The fee is minimal, and it offers coverage in the event of title problems, certain damages, or other legal issues. There are several various types of house insurance plans to select from, each with different levels of coverage. It's critical to have a resource you can rely on to help you through the process of protecting your significant assets. Choosing the correct home insurance protects your investment and simplifies the buying process.
  • Tax Planning: Tax planning is a legal activity that should not be confused with tax evasion or avoidance. According to the Income Tax Act, tax advantages can be claimed on both the principal and interest components of a house loan. Property can also be purchased under joint names. A joint house loan is an option that married couples may find beneficial. Learn about your home loan and the tax benefits that come with it.
  • Water supply and sewage systems: When buying a home, you should think about your water supply, especially in places, towns, and cities where there has been a lot of growth. The impact on local water supplies, as well as new sewage and waste disposal issues, has been disastrous in many regions, and will almost certainly drive up the cost of supplying safe drinking water in the near future. Before purchasing a home, be sure that your property will have access to safe drinking water throughout the year and that the municipal government will offer enough sewage services.
  • Legal Counsel: Legal advice is required for all property transactions, including construction, acquisition, sale, and leasing. Real estate investing is a tremendously rewarding kind of investment since property prices are always rising. In real estate investing, just purchasing and selling isn't enough; you also need to understand the regulations that govern the area where the property is located. You should get legal assistance and draft a contract before purchasing the property.
If you are looking forward to investing in some of India’s best investing opportunities, then it is recommended that you invest through Assetmonk as they provide a higher return on investment. They offer opportunities with an IRR of 14-21%.
 
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