(Newswire.net — February 12, 2020) — The tendency of changing a house into a paying guest accommodation is quickly catching up, particularly in metro cities that experience a vast invasion of working professionals and student population every year. As this profitable business has gathered the attention of numerous property owners, here are some essential tips to remember before changing your house into a PG.
If you are an NRI and already invested in a property in Gurgaon and now you want to convert it into a PG in Gurgaon, then you should go through the below-mentioned points:
Legal formalities before converting a home into a PG
While you are changing your house into a PG, you are changing the accommodation from residential to commercial. As you will be portraying the income instead of renting the services, it will be treated as a commercial property that necessitates the conformity of certain norms and legal formalities. To operate a residential property for commercial purposes, it is essential to search for approvals from public authorities for such exchanges. Typically, co-operative societies resist such proposals, hence, it is essential to take consent in writing at a general body meeting, to stay away from disputes later. Non-compliance with lawful formalities may result in discontinuance of business, which may be a huge monetary loss.
Security measures to take before converting your home into a PG
Before setting up a PG accommodation, be aware of the security measures, particularly when letting out the property to females. As per a recent report innovation and technology can be a support to avoid any disaster when you plan to offer your property to female paying guests. Apart from this, a watchman and CCTV installation are very much important from a security perspective to record all the exits and entries. Besides, also inform civil authority in your area about the change of the property to avoid any issues in the future.
Background checks must be done before converting your home into a PG in Noida
Knowing your guests before letting out the property is most essential. Proper verification should be carried out and photocopy of documents that serve as identity proof such as aadhar card, passport, official id or college id, should be kept for future records and reference.
Rent contract is another essential certificate that should be validated and filled by the inhabitant. Apart from portraying the background information of the lessee, the rent contract also suffices other requirements. For example, if you plan to change the rent amount periodically, which is typically one year, it can be included in the agreement. After it is signed by the tenant, it imitates his/her consensus and guards you from any future conflict.
Amenities and staff arrangements necessary for converting your home into a PG
Providing PG services calls for extra expenses. The bare minimum amenities provided by PGs include wardrobe, bed, and room cooler, which can be an extra cost. Besides, staff should be hired for cleaning bathrooms, rooms and a caretaker and a watchman to supervise the property. Marketing expenses are also incurred to publicize about the PG and entice tenants.
Expenses of converting your home into a PG
Conversion of the property from residential to commercial not only changes its profile but also influences your expenses and monthly bills. While letting out the property to numerous guests will enhance your earnings, your liabilities will also enhance as now all the facilities such as gas, electricity, and water would be chargeable at a commercial rate. Also, the property tax paid would be imposed according to a commercial property instead of residential property.
Before converting a house into PG in Gurgaon or PG in Noida, an NRI needs to invest in Indian real estate by following the below-mentioned guidelines:
- If an NRI holds an Indian passport, then that person needs no consents for investing in the real estate of India. Under the general permission category, Persons of Indian Origin necessitate no approvals if not they are residents of nations like Bangladesh, Pakistan, Afghanistan, Sri Lanka, Iran, China, Bhutan or Nepal.
- NRIs can buy any number of properties, both commercial and residential. But they are not permitted to purchase any kind of the farmhouse, agricultural land, and plantation property if not it has been inherited or gifted by them.
- When an NRI is purchasing a property in India, that individual can process payments through usual net banking by means of inward payment. They can also do the transaction by means of NRE accounts or NRO accounts or a foreign currency non-resident deposit accounts. There is no need for payment via cheque or in foreign currency cash.
- If an NRI has been gifted with or inherited any kind of immovable property, RBI has no rules to preside over those types of properties. RBI does not limit the leasing or renting of the property if it is acquired by an NRI already.
- NRIs are eligible to submit an application for loans in India. Approximately eighty percent of the property value will be offered as a loan to the NRI home buyers. The remaining of the money has to be furnished by the NRIs themselves. When it comes to loan settlement, NRI should pay back in Indian rupees only to the individual banks.
- While making any type of property investment in India, it will include registration charges, stamp duty, and service tax that need to be paid as per the Indian rules. The property tax differs based on the kind of property and the location. There are 3 blocks for payment of stamp duty in India, that is, four percent of the property value if the owner is a woman, five percent if it is the property with joint ownership and six percent if the buyer is male. A registration fee of one percent is applicable to all property transactions.
These are some of the significant rules every NRI property investor in India should adhere to. Also, consult with the property advocate for proceeding with the process effortlessly and smoothly.