House Rent Advance

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House Rent Advance this is the term for the amount paid by a TENANT to the LANDLORD at the time of taking possession of the house. Taking Hyderabad in consideration the Advance amount is usually 2 months rent paid in advance to the LANDLORD by the TENANT at the time of taking possession of the house, this is much lesser when compared to other metro cities like Bangalore, Pune, Mumbai and Delhi where the advance amount is typically 10 months rent.

1. Lets’ understand about this ADVANCE amount in detailed. There are two methods how this works out. The LANDLORD seeks this advance amount from the TENANT and usually will return the amount when the TENANT vacates the house.
2. The TENANT intimates the LANDLORD that he will be vacating the house after 2 months and says that he will not pay the RENT for the 2 months and asks the LANDLORD to get it adjusted from the advance amount which he paid at the time of taking the possession of the house.In either ways the LAND LORD seeks the advance amount from the TENANT.

The above two ways looks absolutely fine. But, on the flip side there are some problems faced by both the LANDLORD and the TENANT.

The Problems Faced:

Let me be very clear that the problems faced are only when either of the two the TENANT or the LANDLORD creates a problem, these problems is on a case to case basis and are not faced by everyone. I have listed them based on my personal experience and the experiences from my friends especially in Hyderabad where people don’t strictly adhere in documenting a Rental Agreement.

Typically when the method 1 is followed the TENANT will be on the loosing side if the LANDLORD creates a problem. And when the method 2 is followed the LANDLORD will be on the loosing side if the TENANT creates a problem.

Lets’ take the case of following Method 1:

In this case the LANDLORD seeks this advance amount from the TENANT and usually will return the amount when the TENANT vacates the house. But, at times the LANDLORD denies returning the amount back. The usual excuses given by the LANDLORD are:

“I’ll pay you back the amount if the next TENANT pays me the amount.”

“I do not have the money with me right now, you can collect it later.”

“I’ll pay you the money in installments as I do not have that amount in lump some.”

Whatever might be the reason the TENANT suffers here, his money gets blocked. If he needs to pay advance to another house he cannot utilize this amount. The LANDLORD will not let their house if the advance amount is not given. In such cases the TENANT is on a losing side.

Lets’ take the case of following Method 2:

In this case the TENANT intimates the LANDLORD that he will be vacating the house after 2 months and says that he will not pay the rent for the remaining 2 months and asks the LANDLORD to get it adjusted from the advance amount which he paid at the time of taking the possession of the house.

The problems faced by the LANDLORD here is:

If there are any damages done by the TENANT to the house or the TENANT tries to default the utility bills like Electricity, water, maintenance etc., those charges are to be paid by the LANDLORD.

Here the LANDLORD is on the loosing side by paying for repair charges or bill payments which are supposed to be paid by the TENANT.

Striking Equilibrium – Can be a Solution: After looking at the above two cases what can be a possible solution is that if the advance amount is of 2 months rent then, let the LANDLORD adjust 1 month(s) rent as in case 2 and return 1 month rent as in case 1. By following this, the chance of loosing amount by either side is reduced. Also, it is best advised to follow a standard Rental Agreement between the LANDLORD and the TENANT and make sure that the terms for Returning/Adjustment of the Advance amount is discussed clearly and agreed upon by either at the time of taking possession of the house.