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|April 20, 2000||
Making money on Leave & License
You have a vacant apartment. But, you will never rent it out. After all, what if your tenant decides not to vacate and makes your apartment his own. That's why tenancy has been put on the backburner and L&L is now the most popular option.
A Leave & License agreement does not give the occupants any ownership rights. The agreement only permits occupancy for a specific timeframe which could range from 11 months to 33 months. Should he refuse to vacate, the matter can be brought before the Competent Authority who will then take action.
A lease, on the other hand, generally refers to a plot of land and has a much longer timeframe which could extend to 99 years. Where a lease is concerned, the occupant can sub-lease it to a third party (if permitted in the lease deed), a right not given in the case of L&L.
A rental is shunned by landlords as the issue of permanent occupation often causes problems. With no definite timeframe, the tenants often refuse to relocate and claim tenancy rights. If the matter is taken to court, it is dragged on for years.
Is permission required?
If it is an apartment, permission of the society is needed. Some housing societies insist that the licensee (the person you have leased your apartment to) becomes a nominal member of the society. It is not as frightful as it sounds. Unlike an ordinary member, the nominal member has no voting rights, is not eligible to become a committee member and cannot be appointed as a society representative.
So what's the logic? In case he decides to play tough and refuses to vacate, apart from the apartment owner filing a suit, the society can also do so in the co-operative court. If it is a company, then suits can be filed under the Companies Act.
Getting your money's worth
The most lucrative deals can be got by letting out your apartment to a company looking for residential space for its employees. If you are lucky enough to own an apartment in a building used for commercial purposes or situated in a commercial area, then you can offer it for office space.
What companies consider when taking office space
What companies consider when taking residential space
Fixing a quote for L&L
There are two ways to make money on L&L: investing the refundable security deposit and earning a monthly income. Let's assume that according to the market value of the property, the cost to the tenant should be Rs 3,00,000 for 11 months. You, as a landlord, will make more money if you take a lower deposit and a higher rent. Here is the range within which you can negotiate with the licensee (person you are leasing out the premises to).
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