Understand the mortgage terms and conditions
Not all properties can be offered for rent! If the property has been mortgaged to the bank, in principle, the mortgagee’s consent must be obtained before the property can be offered for lease. Many banks also have mortgage or rent restrictions on non-self-used properties. Banks may increase their interest rate or call in a loan if they find owners violating the agreement, even they face legal consequences.
Check the tenant’s background
It is very important to know the tenant’s background before signing the lease contract. It is recommended for the landlord to ask the tenant to provide information or a copy of ID card, payroll statements and other relevant documents. It is best for the landlord to have a copy of the tenant’s relevant documents for the record, and even to call the tenant’s company to confirm his identity.
Setting the asking rent
Landlords can take reference from the recent transaction prices of flats one floor above and below his flat. The difference in rent is subject to the interior decoration, furnitures and if a flat comes with a parking lot or not.
Landlords need to clearly state whether the rent includes rates, government rent, and management fees. Offering flats for rent in an all-inclusive manner is commonly used by landlords.
Rent allowance under the Compensation Social Security Assistance (CSSA) scheme
It is recommended to obtain the agreement in which CSSA under the Social Welfare Department (SWD) will directly transfer the rent allowance to the landlord』s account. If the tenant owes rent, the landlord can report to the SWD.
Lease and deposit
The lease agreement needs to clarify the responsibilities and obligations of both parties.
It should also clearly stipulate the terms of compensation should the condition of the flat and goods inside the flat are damaged by the tenant during the leasing period.
When signing the lease contract, the tenant pays the landlord a two-month deposit and prepays rent for the first month. The term of the lease is generally for two years – equally split between fixed and flexible terms.
Both parties must complete the first year of the contract; and in the second year, both parties have the right to terminate the lease according to the previously agreed notice period.
Avoid receiving cheques and handing keys in the evening
Many “rogue tenants” intentionally pay rent with a cheque in the evening and on weekends. After the flat owner hands over the keys, there have been instances when the latter discovered he had been given a blank cheque.
Submit CR109 in the first month of renting
After signing the tenancy agreement, the landlord must submit Form CR109 “Notice of New Letting or Renewal Agreement” to the Rating and Valuation Department within one month. Otherwise, the court will not accept related tenancy disputes in the future. If the tenant did not pay rent for more than 15 days, the landlord can apply to the Lands Tribunal for repossession, usually within 3 to 4 months.
Take pictures of the flat before renting it out
Before the landlord rents out his flat, it is recommended to take photos of the property for record-keeping purposes. If a tenant withdraws from the lease, the latter is required to restore the flat according to its original condition as shown in photos taken by the landlord. The landlord should prepare a list if the unit is rented out with electrical appliances. Before signing the formal tenancy agreement, other parties should check whether the furnitures, electrical appliances, water, electricity, and gas are in normal condition.
Sign the formal lease agreement if there are no objections.
Purchase insurance cover against 「rouge tenants”
There are insurance companies in the market which provide insurance cover against 「rouge tenants」 which will enable landlords to file claims for legal expenses, rent arrears, third party casualties, property damage, and other legal liabilities. This insurance cover will provide protection to property owners.
Did you gain a deeper and more well-rounded understanding of property transactions after reading this comprehensive buyers’ guide? Property leasing transactions involve numerous complicated procedures, and surfing online alone may not be able to address all your questions. I suggest you find a reliable broker as soon as possible!
Are there any other difficulties that you have in buying a property? Our professional and licensed customer service will help you resolve the odds.