Terms to know when RENTING!!! | MISTER T REAL ESTATE BLOG

The whole system of paying rent needs to change in Sri Lanka. Firstly, the terms or rather definitions need to be learnt and understood properly and not assumed. The issue with assuming terms and conditions is that it would lead to an eventual cancellation of the deal, which is not what we want.

Property owners need to be educated and that is also one of the prime purposes of setting up this BLOG!

So what are the definitions which come into play? Let’s take a look.

1. Advance

This is something that needs to be removed from the system but will take a long time to come into effect. Many property owners do not know the difference between this and the deposit (see below). Advance is the amount you pay at the point of signing the agreement. Of course, you can also pay a refundable advance (small amount) just to lock the property so the property owner will not show it to anyone else but that rarely happens in rentals.

2. Deposit

This is the security refundable deposit and again a very tricky one. There are property owners who have varied terms and conditions, some expect you to pay a security refundable deposit of 6 months’ (which is stupid and insane), some expect you to pay 3 months and some expect you to pay 1 month which is acceptable.

There is no need to pay a high security refundable deposit if the property owner can visit once in two months and get the tenant to fix whatever he or she has broken or damaged. The security refundable deposit could be taken as the rent instead -why should you pay so much? I don’t see a point in locking so much money and what if it’s not returned. At times, clients forget to collect the retainer. It’s a win-win situation for both if the owner has the right attitude towards the client. 01 month is acceptable and best to stick to it.

3. Tax

This could mean a million things. Get your lawyers involved. Get the good lawyers in. You are paying them and they need to be impressive in what they do. It’s sad to see some lawyers doing the realtor’s job under the table. I am fine if it’s done properly but doing the job under the table just to make a buck will only contribute towards the corruption of the profession. There is property tax, stamp duty, government tax and what not.

4. Legal Fees

This is the fee paid to the lawyer for drawing the agreement and looking after the interest of both parties and hence, it’s always split.

The system requires a great deal of change and this will begin only when someone who knows the way shows the way to everyone in order to conclude a successful deal.