Rent Receivables Loan

Rent receivable loans can be used by a borrower to manage gaps in the cashflow and/ or as a general purpose term loan for investment in real estate or business purpose or any other use. Owners of residential buildings and commercial properties in rural/semi-urban/urban/ metro areas, which are to be rented or already rented to MNCs/ Banks/ Large and medium size corporates are eligible for the rent receivable loan scheme. Most of the Banks in India offer rent receivable loan schemes, in this article, we look at the an overview of the scheme including eligibility criteria, terms and more.

Overview

Property owners having rent fetching property in Metro/ Urban Area/ Semi-Urban areas/ Rural Areas can avail rent receivable loan for a wide range of purposes like business expansion, education expense, marriage expense, renovation or construction expense, purchase of real estate or any other purpose. The property from which rent is being received must have been let out or leased under a registered lease deed or

leave & license agreement. The tenant can be a Public Sector Undertakings or Govternment Body or Semi-Government Body or State Government or reputed corporate houses, Banks, Financial Institutions, Insurance Companies, Multinational Companies, Warehouses, large retail outlets, person engaged in trade, commerce & business, Professionals, self Employed, High Net worth Individuals, Salaried Class, Proprietary firms, Partnership firm, companies, etc.

Loan Amount

Loan of upto Rs.10 crores can be provided against rent receivables with a maximum of 120 monthly installments or residual lease tenure, whichever is less. The maximum loan amount provided is also constrained to 85% of the market value of the property. The net rent minus TDS and other taxes or dues will be deducted while calculating the total loan amount. Further, loan is provided in the following proportion:

Lease Period	Loan as a Proportion of the future rent receivables.
Up to 3 years	85%
3 years to 5 years	75%
5 years to 7 years	65%
7 years to 10 years	55%

Collateral Security

The rent yielding property must be provided as collateral security to the bank by providing first charge by way of equitable mortgage. In case equitable mortgage is not possible on the rent yielding property for any reason, then some of other property with a market value not less than 150% of the proposed loan must be provided.

To obtain a rent receivable loan, visit IndiaFilings.com

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Frequently Asked Questions

Common questions about Rent Receivables Loan in India for Property Owners.

A rent receivable loan is a type of loan offered by banks in India to property owners who are receiving rental income from their properties. It allows borrowers to leverage their future rental income as collateral to obtain financing for various purposes, such as business expansion, education expenses, renovations, or real estate investments.

Property owners who have rented out their residential or commercial properties in urban, semi-urban, or rural areas to reputable tenants such as MNCs, banks, large corporates, government bodies, or public sector undertakings are eligible for a rent receivable loan. The property must be rented out under a registered lease deed or leave and license agreement.

The loan amount is calculated based on the future rent receivables from the leased property. Banks typically offer loans up to 85% of the market value of the property or a certain percentage of the future rent receivables, whichever is lower. The percentage of rent receivables considered depends on the remaining lease tenure.

Banks in India offer rent receivable loans up to a maximum of Rs. 10 crores (100 million rupees). The repayment tenure is capped at 120 monthly installments or the residual lease tenure, whichever is shorter.

The rent-yielding property itself must be provided as collateral security to the bank by creating an equitable mortgage or first charge on the property. If an equitable mortgage is not possible on the rent-yielding property, another property with a market value of at least 150% of the proposed loan amount can be offered as security.

Yes, rent receivable loans can be used for various purposes, such as business expansion, education expenses, marriage expenses, renovation or construction costs, real estate purchases, or any other personal or commercial needs.

The net rent receivables after deducting TDS (tax deducted at source) and other taxes or dues are considered for calculating the future rent receivables and determining the loan amount.

Yes, the tenants occupying the rent-yielding property should be reputable entities such as public sector undertakings, government bodies, semi-government bodies, state governments, large corporates, banks, financial institutions, insurance companies, multinational companies, warehouses, large retail outlets, professionals, self-employed individuals, high net worth individuals, salaried individuals, proprietary firms, partnership firms, or companies engaged in trade, commerce, and business.

Yes, rent receivable loans can be used for personal expenses like education, marriage, or any other personal needs, in addition to business or investment purposes.

While the documentation requirements may vary across banks, generally, applicants need to provide proof of ownership of the rent-yielding property, a registered lease deed or leave and license agreement, rent receipts or bank statements showing rental income, and other standard loan application documents.