Things To Consider Before Turning Your Home into PG Accommodation

Admin 01 Mar 2024 2,815 Views
Knowledge Advice

India has the highest demographic dividend on the entire planet. Many people are migrating to larger cities due to the growing workforce, and small towns are gradually becoming the centre of employment and economic activity. This unexpected growth, which has reduced the cost of homeownership for many, has also benefited the real estate sector. Currently, there are various ways to generate revenue from a home or apartment, with the most popular one being to transform it into a paying PG guest house or apartment. Young single people are now choosing PG homes since they provide a cosy and economical dwelling choice. And this has offered Indian homeowners a great chance. 

Here are some key factors to consider in PG business if you're planning to turn your home into PG accommodation.

Things to know before converting your house into a PG

Those housing advantages are over: As soon as you make the house a facility for paying guests, it is a commercial property. Electricity, water, and tax bills must be paid at commercial rates. Compared to residential expenses, these charges are substantially higher. You could also need a commercial gas connection, which is more expensive than a residential one.


Additional Responsibilities: Sanjeev Vasudev from Bhakti Realties, a brokerage company in Mumbai, claims that landlords will also have more obligations, such as 10-hour workdays if they choose to prepare their meals. You can employ a cook, but the cost would go up. You must set up security measures, such as a guard and surveillance cameras.

Regulations and Laws: You require permits to convert your home into a PG facility. These include nods from neighbourhood watch groups and the police. Every city has different laws and ordinances that you must follow to maintain a steady income stream. You have to make paying guest accommodation rules.


Countering societal pressure: Cooperative housing societies would not enjoy the full-scale commercial usage of residential structures, according to Asha Nayyar Basu, managing partner of S Jalan & Co (New Delhi).


Marketing demands: If no one knows about your PG facility, you cannot be a successful proprietor. You need effective marketing to spread the word about your paying guest facility. You can do it yourself or employ a marketing specialist, although it will take more time.


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Adding Additional Facilities: You must also take care of the amenities and services that are part of the rent. The services may also be made optional. These include things like food, laundry, storage spaces, and WIFI. But keep in mind that increasing services will raise your operating cost. Therefore, you must adjust the prices to turn a profit without overcharging.


Rent Agreement: You should have a rental agreement with the visitors. It may include measures to prevent upcoming disputes. If you intend to raise the rent, for instance, periodically, include that in the contract. Other issues can involve arriving and leaving the property; you can specify the times in the agreement.

While turning your home into a PG comes with many duties, you can still earn a good living doing it, especially in metro areas with significant demand for PG lodging. For instance, a PG facility in Bangalore with four beds might earn about INR 7000. If fewer people are sharing a room, you can raise the fee. In Mumbai, income from single occupancies might range from INR 10 K to INR 30 K, depending on the locality.

Background Checks: Making sure you are not sheltering fraudsters is a must. Otherwise, you risk losing your money and perhaps getting in trouble. As a result, you must ask them for the required IDs. Giving the names of your paying guests may also be necessary for police verification.

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What responsibilities should you enforce for paying guests?

You must uphold the law so that all paying visitors can coexist peacefully.

● They must take responsibility for acting appropriately around other paying visitors, which includes showing everyone respect and observing their privacy.

● Anyone who makes loud noises, such as through music or drumming, shouldn't be allowed to do anything. You, your visitors, and your neighbours will find it annoying.

● All visitors must likewise act decently around residents of the area. You must punish such actions severely. Do not be afraid to report the tenants' illegal behaviour.

● And lastly, never give guests control of the kitchen. It will interfere with your financial planning and annoy other visitors.

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What are the legal formalities before converting your home into a PG?

You are changing the type of lodging from residential to commercial when you turn your home into a PG. Because you will receive income rather than renting out the services, it will be regarded as a commercial property and subject to various regulatory requirements.


Getting the local authority's consent before converting a residential property to a commercial operation is essential. To avoid disagreements later, obtaining approval in writing at a general body meeting is necessary because cooperative societies typically oppose such plans. Failure to follow legal requirements may result in a business closing down, which could result in a substantial financial loss.


Difference between a rented-out property different from a paying guest facility

The following are some ways that a rental property differs from a PG lodging:


● Residential bills, such as those for electricity, water, gas, and other utilities, must be paid by rental property tenants.

● The owner is not permitted to enter the property while tenants still reside without their consent. All tenants will have absolute privacy. You only charge for a bed or a room when you have a paying guest facility. Typically, the owner shares a home with paying visitors.

● The home belongs to the tenants, who can utilize it however they like. Property harm is thus more likely. As a result, you might need to request a larger security deposit while renting out your house.

● If you rent your home, you are not allowed to charge per person.

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6. FAQ

Q. What is paying guest accommodation?

Allowing individuals to stay on your property and utilize particular amenities in exchange for a monthly charge is known as paying guest accommodation. Typically, the cost is per person.


Q. What is the most crucial factor when converting your hours into a paying guest facility?

The fact that a PG facility is a for-profit business is its most significant characteristic. Owners won't profit from home advantages like low electric bills.


Q. What are the essential security measures required in a PG facility?

Security measures in PG lodging must include the following:

 (i) security cameras

 (ii) security personnel 

(iii) one secure safe per person 

(iv) police verification of each guest.


Q. What are the expenses of converting your home into a PG?

The property's profile changes when converted from residential to commercial use, and your monthly costs and expenses are also affected. While renting out your home to several guests can raise your income, it will also increase your liabilities because all utilities, including electricity, gas, and water, will now be billed at a commercial rate. Additionally, rather than being assessed based on a residential property, the paid property tax would be based on a commercial property.

About Author

Jatin Dubey

An enthusiastic content writer who is a law graduate and has been working as Real Estate Consultant for around 9 years.
He has worked with top Real Estate Agencies and Builders in Delhi, Bangalore and Pune. His skills to perform market analysis and explore high potential localities has helped many clients in the past.

An enthusiastic content writer who is a law graduate and has been working as Real Estate Consultant for around 9 years.
He has worked with top Real Estate Agencies and Builders in Delhi, Bangalore and Pune. His skills to perform market analysis and explore high potential localities has helped many clients in the past.

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