Renting out your property: dos and don'ts for landlords

General information, not legal or tax advice. Rules, tax rates and local procedures change and differ between municipalities, so confirm with your ward or municipality office, the tax office or a lawyer.

Renting out a flat, a floor or a few rooms is a steady source of income for many families in Nepal. Most problems between landlords and tenants come from things that were never agreed clearly at the start. A little paperwork and fairness protect your property, your income and your relationship with the people living in your house.

Get the property ready

Do:

• Fix safety issues first: loose wiring, missing earthing, broken railings on stairs and roofs, unsafe gas cylinder placement, and cracked water tanks.
• Fix leaks and damp before a tenant moves in. Damp walls lead to disputes about deposits and health.
• Install a separate electricity sub-meter for each rented unit, so bills can be split fairly. Agree the rate per unit in writing.
• Make spare keys and decide who holds them. Change locks between tenants if keys were not all returned.
• Take dated photos and videos of every room before the tenant arrives.

Don't:

• Don't rent out space that is unsafe, such as a basement that floods or a room without ventilation. The Civil Code prohibits renting out a house that is not safe to live in from a health and security point of view.
• Don't hide defects: the Civil Code requires you to disclose any structural weakness when you sign the agreement.

Set a fair rent

Look at similar listings in your area (same size, floor, water supply, parking) to set a realistic rent. A slightly lower rent that attracts a reliable long-term tenant is often worth more than a high rent with frequent vacancies.

Choose your tenant carefully

Do:

• Meet the tenant in person, and the main adult members of a family.
• Ask for a copy of their citizenship certificate or other ID and their workplace or college details.
• Ask for a reference from a previous landlord or employer and call them.
• For a company or organisation, ask for its registration certificate and PAN, and the name of the person authorised to sign.

Don't:

• Don't discriminate unfairly, and don't ask for more personal information than you need.
• Don't hand over keys before the agreement is signed and the agreed advance is paid.

Put everything in writing

Under the National Civil Code (section 386), the owner shall make a written agreement with the tenant, with the tenant's photo and at least two witnesses from each side. It is not legally required if monthly rent is Rs 20,000 or less, but it is still the clearest record; above Rs 100,000 a month it must be registered. Include:

1. Names, addresses and citizenship or registration numbers of both sides.
2. Exactly what is rented: floor, rooms, parking, rooftop, furniture.
3. Monthly rent, due date and payment method.
4. Advance or deposit: amount, what it covers, and when and how it is returned.
5. Bills: electricity (with sub-meter rate), water, garbage, internet, tanker water.
6. Duration, renewal, and how and when rent can be increased.
7. Notice period for either side.
8. Repairs: what you fix and what the tenant fixes. If the agreement is silent, the Civil Code puts repairs on the tenant, so be clear.
9. Use and occupancy: residential or business, number of occupants, no subletting without written consent, no structural changes.
10. Attach a signed inventory of furniture, fittings, keys and existing damage.

Both sides sign every page, ideally with witnesses, and each keeps an original.

Rent, receipts and records

Do:

• Give a receipt for every cash payment (the Civil Code requires it), showing the month and amount, or accept payment by bank transfer or wallet so there is a record.
• Keep a simple ledger of rent received, bills and repairs for each tenant.
• Keep copies of the agreement, inventory and photos for several years.

Don't:

• Don't take a large advance without writing how it will be adjusted or refunded.

Register and pay tax

• Rent tax: under the Local Government Operation Act 2074 (section 57), municipalities and rural municipalities levy a rent tax on houses and land rented out, at a rate set in each one's yearly finance act. For example, Lalitpur Metropolitan City's Finance Act 2082 set 10% of the rent, required the agreement to be submitted where rent exceeds Rs 20,000 a month, and asked owners to report vacancies or rent cuts to the ward within 35 days. Under the Income Tax Act, a tenant need not withhold income tax on house rent paid to an individual. Ask your municipality's revenue section how to register and pay, and keep the receipts.
• Tenant records: municipalities may ask for the agreement and the tenant's ID when you register for rent tax. Ask your ward office what your area requires, and keep copies.

While the tenant lives there

Do:

• Respect the tenant's privacy. The Civil Code lets you inspect with advance notice; agree a time before visiting, except in a real emergency.
• Do repairs promptly when they are your responsibility, and keep receipts.
• Raise problems (late rent, noise, damage) in writing, politely and early.

Don't:

• Don't cut off water or electricity, change the locks or remove belongings to pressure a tenant. Use the agreement, mediation and the legal process instead.
• Don't raise the rent except as the agreement allows.
• Don't enter the tenant's rooms when they are not there without permission.

Ending a tenancy

Do:

• Give notice in writing as your agreement and the law require, and keep a copy. If you need the house for yourself, the Civil Code requires at least 35 days' written notice, and you may not rent it to someone else for three months without using it yourself.
• Do a joint inspection using the move-in inventory and photos, and record final meter readings together.
• Return the deposit promptly, with a written list of any deductions for unpaid bills or damage beyond normal wear and tear.
• Collect all keys.

Don't:

• Don't keep the whole deposit for ordinary wear such as faded paint or small marks.

If there is a dispute

Talk first, using the agreement, receipts and photos. If that fails, your municipality's judicial committee handles house rent disputes and tries mediation first. If a tenant disappears owing three months' rent or more, apply to the ward office, which follows a notice procedure before the house can be opened; never break in yourself. For serious matters, consult a lawyer. See Rental agreements and the law for the details.

Quick checklist

• Safety fixed, leaks repaired, sub-meters installed, photos taken
• Tenant met; ID, references or company papers checked
• Written agreement with rent, deposit, bills, duration, increases, notice and inventory
• Receipts for every payment; ledger kept
• Rent tax registered and paid with your municipality; agreement and tenant details submitted if required
• Privacy respected; no cutting utilities or lockouts
• Written notice, joint inspection and prompt deposit refund at the end