India, with its highest demographic dividend, has thousands of people migrating to larger cities daily for education or employment purposes. For many of them, especially the younger demographic, renting or buying their home isn’t always economically feasible. This is where the culture of Paying Guests or PGs comes into the picture.
PGs are in high demand by bachelors who work far from home or students studying in a university away from home. They are the first choice as they provide a cozy and economical dwelling. All you have to do as a PG is pay a monthly fee without worrying about legalities.
With the rise in demand, converting a section or the entire house to a PG has become a thriving business for landlords. Converting your house into a PG or Paying Guest accommodation can also prove to be a game-changer for your finances by being an extra source of money. In Pune especially, given the large population demographic of young students and professionals, PGs have become a popular source of accommodation and income across the city’s expanse.
And if you plan on doing the same, here are some key factors to consider before turning your home into PG accommodation.
The legal formalities
When you convert your home to a PG, you alter the accommodation from residential to commercial. As an owner, you’ll be drawing additional income for renting the services; hence your property will be treated as a commercial property. A commercial property requires compliance with certain legal formalities and norms, including various permissions and approvals from municipal corporations and local police. Additionally, regulations and rules vary in every city and state, and you must comply to maintain a regular income flow.
And while we talk about legal formalities, as an owner, always ensure that you and the guests have a rent agreement. Ensure that you include points clearly to avoid future conflicts. For example, you may write in the contract if you plan to increase the rent periodically or about entering and exiting the premises; and state their timings in the agreement
Additional expenses
The minute your house becomes a commercial property, you’ll have to incur additional expenses and bills. Your bills, including electricity, water, and taxes, will be charged at commercial rates much higher than residential bills. You may also require a commercial gas connection at a higher rate than the regular one.
Also, when you convert your home to a PG, you’ll have to provide at least the bare minimum amenities offered by PGs, including a bed, wardrobe, and room cooler, which can be an additional cost for you. Besides, you will also have to hire support staff for cleaning rooms, and bathrooms and a watchman and a caretaker to supervise the property. The marketing of your PG to advertise the accommodation and attract tenants, if done professionally, will also add to your expenses.
Increased security provisions
Landlords who convert their homes into PGs have increased responsibilities, including 10-hour work per day if they decide to cook for themselves. While you can hire a cook or helper, it would increase the expense. As an owner, you also need to arrange for security, including a guard and security cameras.
While doing so, you also need to ensure you are not housing fraudsters. Otherwise, you may not just lose your investment but also face charges and legal troubles. Therefore, when housing guests, make sure to request the necessary IDs from them. It may also be essential to give the names of your paying guests for police verification in some cities or states.
Opposition from the housing society
Many PG owners face opposition from their housing society and neighbours when converting their house to a PG. Experts say that cooperative housing societies do not enjoy the full-scale commercial usage of residential structures, which owners must keep in mind.
The trend of converting homes to PGs in Pune and other cities is drawing the attention of many people. There’s no denying that this is the best way to earn some extra income by making a few changes in your property and utilizing additional space to the fullest. But while you do so, don’t forget to consider the above points for a smooth and efficient transformation and run.
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