𝗜𝗻𝘁𝗿𝗼𝗱𝘂𝗰𝘁𝗶𝗼𝗻

Renting out a property can be a valuable source of income, whether you own a house, apartment, or other residential property. However, becoming a landlord involves much more than finding a tenant and collecting monthly rent.

From having a proper lease agreement and understanding applicable stamp duty requirements to including appropriate clauses and being mindful of how the property is used, landlords need to consider several important legal and practical matters before handing over the keys.

In a recent CeylonProperty.lk podcast conversation, Mr. Sameera Silva discussed important considerations landlords should be aware of when renting out their properties. The conversation highlights why having the right documentation, clearly defining the terms of a tenancy, and remaining vigilant about the use of a property can help landlords reduce unnecessary risks and confusion.

This guide explores some of the key legal and practical considerations every landlord in Sri Lanka should keep in mind before and during a tenancy.

𝗞𝗘𝗬 𝗖𝗢𝗡𝗦𝗜𝗗𝗘𝗥𝗔𝗧𝗜𝗢𝗡𝗦 𝗕𝗘𝗙𝗢𝗥𝗘 𝗥𝗘𝗡𝗧𝗜𝗡𝗚 𝗢𝗨𝗧 𝗬𝗢𝗨𝗥 𝗣𝗥𝗢𝗣𝗘𝗥𝗧𝗬

𝗖𝗵𝗲𝗰𝗸 𝟭 — 𝗛𝗮𝘃𝗲 𝗮 𝗣𝗿𝗼𝗽𝗲𝗿 𝗟𝗲𝗮𝘀𝗲 𝗔𝗴𝗿𝗲𝗲𝗺𝗲𝗻𝘁

One of the most important steps when renting out a property is having a properly prepared lease or rental agreement.

A rental agreement should clearly identify the landlord and tenant, the property being rented, the rental amount, duration of the tenancy, payment terms, and the responsibilities of both parties.

It should also clearly establish how the property may be used during the tenancy. Depending on the circumstances, relevant clauses may address subletting, alterations, maintenance, access to the property, permitted occupants, and activities that are not allowed on the premises.

Rather than relying on a verbal understanding, landlords should ensure that the terms of the tenancy are properly documented and agreed upon before the property is handed over.

𝗖𝗵𝗲𝗰𝗸 𝟮 — 𝗕𝗲 𝗠𝗶𝗻𝗱𝗳𝘂𝗹 𝗢𝗳 𝗦𝘁𝗮𝗺𝗽 𝗗𝘂𝘁𝘆

Stamp duty is another important consideration when entering into a lease or rental arrangement.

Landlords should not treat stamp duty as an unnecessary formality. The applicable requirements should be checked and addressed correctly when preparing the lease or rental agreement.

Taking care of the relevant documentation and formalities at the beginning of the tenancy can help avoid unnecessary complications later.

Where there is uncertainty about the applicable stamp duty or legal requirements, it is advisable to obtain guidance from a qualified professional.

𝗖𝗵𝗲𝗰𝗸 𝟯 — 𝗜𝗻𝗰𝗹𝘂𝗱𝗲 𝗖𝗹𝗮𝘂𝘀𝗲𝘀 𝗧𝗵𝗮𝘁 𝗣𝗿𝗼𝘁𝗲𝗰𝘁 𝗬𝗼𝘂𝗿 𝗜𝗻𝘁𝗲𝗿𝗲𝘀𝘁𝘀

A rental agreement should not simply state how much rent the tenant has to pay.

The agreement should clearly establish the conditions under which the property is being rented. Landlords should consider appropriate clauses relating to the use of the property, subletting, alterations, maintenance, number of occupants, and other relevant matters.

Particular attention should also be given to activities that are prohibited on the premises.

Clearly written clauses can help both parties understand their obligations and provide a stronger basis for dealing with disagreements that may arise during the tenancy.

𝗖𝗵𝗲𝗰𝗸 𝟰 — 𝗕𝗲 𝗠𝗶𝗻𝗱𝗳𝘂𝗹 𝗢𝗳 𝗪𝗵𝗮𝘁 𝗛𝗮𝗽𝗽𝗲𝗻𝘀 𝗜𝗻 𝗬𝗼𝘂𝗿 𝗣𝗿𝗼𝗽𝗲𝗿𝘁𝘆

Once a tenant moves into a property, the landlord may not always know everything that happens inside the house or apartment.

People may come and go, visitors may stay, and the property may be used in ways the landlord did not originally anticipate.

This does not mean that landlords should interfere unnecessarily with a tenant's lawful use of the property. However, they should remain appropriately vigilant and take concerns about suspicious behaviour or potential misuse seriously.

If there are concerns about illegal activities taking place at a rented property, landlords should seek appropriate legal or professional advice rather than simply ignoring the situation.

𝗖𝗵𝗲𝗰𝗸 𝟱 — 𝗕𝗲 𝗔𝘄𝗮𝗿𝗲 𝗢𝗳 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗦𝗰𝗮𝗺𝘀 𝗮𝗻𝗱 𝗖𝗼𝗺𝗺𝗼𝗻 𝗠𝗮𝗹𝗽𝗿𝗮𝗰𝘁𝗶𝗰𝗲

Financial scams and other forms of malpractice can create problems for landlords during a tenancy.

Landlords should be cautious about unusual payment arrangements, third-party dealings, or requests that fall outside the agreed rental terms.

It is also important to maintain proper records of rental payments, deposits, agreements, communications, and other relevant transactions.

Keeping these records organized can make it easier to establish what was agreed between the parties if a disagreement occurs later.

𝗖𝗵𝗲𝗰𝗸 𝟲 — 𝗨𝗻𝗱𝗲𝗿𝘀𝘁𝗮𝗻𝗱 𝗪𝗵𝗮𝘁 𝗬𝗼𝘂𝗿 𝗧𝗲𝗻𝗮𝗻𝘁 𝗖𝗮𝗻 𝗮𝗻𝗱 𝗖𝗮𝗻𝗻𝗼𝘁 𝗗𝗼

A landlord should have a clear understanding of the permitted use of the property.

For example, if a property is rented as a residential apartment, the agreement should clearly establish whether activities such as operating a business, making structural changes, subletting, or allowing additional occupants are permitted.

The same principle applies to prohibited or illegal activities. A landlord should not assume that simply having a tenant agreement automatically removes every potential legal concern connected to the property.

Where a serious issue arises, the circumstances should be addressed through the appropriate legal channels.

𝗖𝗵𝗲𝗰𝗸 𝟳 — 𝗞𝗲𝗲𝗽 𝗣𝗿𝗼𝗽𝗲𝗿 𝗥𝗲𝗰𝗼𝗿𝗱𝘀 𝗕𝗲𝗳𝗼𝗿𝗲 𝗛𝗮𝗻𝗱𝗶𝗻𝗴 𝗢𝘃𝗲𝗿 𝗧𝗵𝗲 𝗣𝗿𝗼𝗽𝗲𝗿𝘁𝘆

Before handing over the keys, landlords should keep a clear record of the property's condition.

This can include photographs, details of furniture and appliances, meter readings, keys and access cards handed over, and any existing damage or maintenance issues.

Having a clear record from the beginning can help prevent disagreements about the property's condition when the tenancy eventually ends.

It is also useful to keep copies of the signed agreement and other important documents in a secure and accessible place.

𝗔𝗱𝗱𝗶𝘁𝗶𝗼𝗻𝗮𝗹 𝗙𝗮𝗰𝘁𝗼𝗿𝘀 𝗧𝗼 𝗕𝗲 𝗠𝗶𝗻𝗱𝗳𝘂𝗹 𝗢𝗳

Renting out a property involves an ongoing relationship between the landlord and tenant. The landlord should therefore think beyond the initial agreement and consider what may happen throughout the entire tenancy.

Before handing over the keys, make sure the rental agreement is properly prepared, relevant clauses are clearly stated, applicable requirements are addressed, and important records are organized.

Landlords should also understand the procedures available to them if the tenant breaches the agreement or if a serious dispute develops. Taking action through the appropriate legal process is generally preferable to attempting to resolve serious matters informally.

The goal is not to create unnecessary restrictions for tenants. It is to establish clear expectations from the beginning so that both parties understand their rights and responsibilities.

𝗧𝗵𝗲 𝗕𝗼𝘁𝘁𝗼𝗺 𝗟𝗶𝗻𝗲

Renting out a property in Sri Lanka is more than simply finding a tenant and collecting monthly rent.

A responsible landlord should consider the lease agreement, legal procedures, stamp duty, protective clauses, tenant conduct, financial risks, property use, and proper documentation before handing over the keys.

Most importantly, landlords should understand that a rental agreement is not merely a document for recording the monthly rent. It establishes the framework for the tenancy and can help both parties understand what is expected throughout the rental period.

As discussed in the CeylonProperty.lk podcast with Mr. Sameera Silva, landlords should be mindful of both the legal and practical aspects of renting out a property. Taking the time to prepare properly at the beginning can help reduce confusion and unnecessary complications later.

If you are planning to rent out your property, protecting your interests should begin before the tenant moves in.

Listen to the full conversation with Mr. Sameera Silva on the CeylonProperty.lk podcast for more insights into the legal and practical considerations involved in renting out property in Sri Lanka.

𝗖𝗲𝘆𝗹𝗼𝗻𝗣𝗿𝗼𝗽𝗲𝗿𝘁𝘆.𝗹𝗸 — 𝗥𝗲𝗻𝘁 𝗦𝗺𝗮𝗿𝘁𝗲𝗿. 𝗣𝗿𝗼𝘁𝗲𝗰𝘁 𝗪𝗵𝗮𝘁 𝗬𝗼𝘂 𝗢𝘄𝗻.