Lease Rental Discounting in India
Lease Rental Discounting (LRD) is a loan product offered by financial institutions in India against rental receipts derived from lease contracts with corporate tenants. It is a form of term loan that allows landlords to monetize their future rental income by discounting it for a lump sum amount.
Features of Lease Rental Discounting:
- Loan Amount: Up to 90% of the discounted value of the rental income
- Tenure: Typically up to 10 years
- Interest Rate: Usually linked to the MCLR (Marginal Cost of Funds based Lending Rate) of the lender
- Security: Rental receivables and underlying property
- Eligibility: Landlords of commercial properties with lease agreements with reputed corporate tenants
Benefits of Lease Rental Discounting:
- Access to immediate funds without selling the property
- Lower interest rates compared to personal loans or overdraft facilities
- Continued ownership and control of the property
- Tax benefits on interest paid on the loan
Process of Lease Rental Discounting:
- Submission of property and lease agreement documents to the lender
- Valuation of the property and assessment of rental income
- Approval of the loan amount and terms by the lender
- Disbursement of funds to the landlord
- Repayment of the loan through EMI or bullet payments
Overall, Lease Rental Discounting offers a convenient financing option for landlords looking to unlock the value of their rental income. It provides liquidity and financial flexibility while allowing them to retain ownership of their property.