Renting Out Flats from a Land-Sharing Deal with a Developer

Across Dhaka and increasingly in Chattogram, Sylhet and other cities, thousands of families have handed their old one- or two-storey house to a real estate developer under a land-sharing agreement (often called a joint venture or "50:50" deal). A few years later, the developer hands over a share of the flats in the new building — the landowner's share — and the family suddenly owns four, six or ten modern flats instead of one old house. Some flats are kept for family members; the rest are usually let out. Renting out flats received from a land-sharing deal with a developer can provide a strong, steady income, but it comes with issues that ordinary landlords do not face: handover defects, shared ownership among siblings, the building's owners' association, utility connections, registration of each flat, and the question of who manages it all.

This guide walks landowner families through the whole journey — from handover checks and paperwork, to getting flats ready, setting rent, dividing income among co-owners, working with the flat owners' association, and handling tax and records. It includes a worked example of splitting rental income among heirs and a list of common mistakes. It is general information, not legal, tax or investment advice.

How Land-Sharing Deals Work (Briefly)

In a typical arrangement, the landowner provides the land and the developer bears the cost of construction. The completed flats, parking spaces and sometimes commercial units are divided between them in an agreed ratio, and the landowner often also receives a signing money payment and sometimes rent for temporary accommodation during construction. The agreement is usually registered, along with a power of attorney allowing the developer to obtain approvals and sell its share.

By the time you receive your share, you have usually gone through years of construction. The handover moment is when your role changes from "landowner waiting for a building" to "landlord responsible for rental property" — and it is worth preparing for it properly.

Step 1: Check the Handover Carefully

Do not accept keys and immediately put up a to-let sign. Check each flat against the agreement and specifications.

Physical inspection checklist

• Flat size and layout match the approved plan and agreement.
• Specified fittings, tiles, doors, windows and kitchen items are installed as promised.
• No seepage, cracks or damp — check bathrooms, kitchen walls, ceilings under bathrooms and external walls.
• Electrical wiring, switchboards, earthing and distribution boards work safely.
• Water supply to all taps; drainage flows; no leaks under sinks.
• Lift, generator, water pump, fire safety equipment and intercom are operational.
• Parking spaces allocated as per agreement.

Make a written snag list (defect list) with photos and send it to the developer, asking for a date by which each item will be fixed. Keep copies. It is much easier to get defects fixed before the developer's team leaves the site.

Utility connections

Confirm whether each flat has its own electricity meter (prepaid or postpaid from DESCO, DPDC or the relevant utility), gas connection (if Titas or the local gas company has provided one — new connections have been restricted in many areas), and WASA water arrangements. Find out whose name each meter is in and how to transfer it, and whether any deposits or pending bills exist.

Step 2: Sort Out Ownership Documents

The landowner's share of flats usually needs its own paperwork, especially if the land was held by several heirs.

• Allocation letter or handover letter from the developer listing which flats, parking spaces and units are in the landowner's share.
• Division among co-owners. If siblings or heirs jointly owned the land, decide who gets which flat — or whether all flats remain jointly owned. A registered partition or family settlement deed (done through a lawyer) can prevent future disputes.
• Mutation and holding tax. Update land records and ensure holding tax assessments with the city corporation reflect the new building and each owner's share.
• Deeds for each flat, where flats are being separately registered to individual family members.

These steps involve the Registration Act 1908, stamp duty and local land office procedures; fees and requirements change, so work with a lawyer experienced in property matters. Clean documents are also essential if you ever want to sell or mortgage a flat later.

Step 3: Decide Who Manages the Rentals

When several family members own flats in the same building, management is often the hardest part. Options include:

Whichever option you choose, write down how it works: who finds tenants, who signs agreements, where rent is deposited, how expenses are approved, and how often accounts are shared. For probashi siblings, transparent monthly statements are essential. Our guide for probashi (NRI) landlords has more on managing from abroad, and family-owned building management covers shared-ownership issues in depth.

A simple family management agreement (outline)

Even a one-page note signed by all co-owners helps. An illustrative outline:

Family Rental Management Arrangement — [Building name]

1. Flats to be let: [list]. Flats for family use: [list] on the following terms: [rent-free / notional rent Tk ____].

2. Manager: [name], for a fee of [__]% of rent collected. Responsibilities: finding tenants, agreements, collection, routine repairs up to Tk [____] per item.

3. All rent paid into joint account no. [____]; no cash kept beyond [7] days.

4. Repairs above Tk [____] need approval from at least [__] co-owners by phone or message.

5. Monthly statement of rent, dues and expenses shared with all co-owners by the [10th].

6. Net income distributed by the [15th] according to shares: [names and percentages].

7. This arrangement is reviewed every [12] months.

Step 4: Understand the Owners' Association and Service Charge

In a developer-built building, the landowner's flats sit alongside flats sold to outside buyers. The building will usually be run by a flat owners' association (sometimes formed under the developer's guidance initially). This affects you as a landlord:

• Service charge is set by the association to cover guards, caretakers, lift, generator, common electricity and cleaning. You pay it for each of your flats; decide whether your tenants reimburse it separately or it is included in rent.
• Building rules on tenants, visitors, parking, pets, moving hours and renovations apply to your tenants too.
• Tenant information — many associations and local police require tenant details to be submitted. See police verification of tenants in Dhaka.
• Voting rights. Landowners with many flats often have significant influence in the association. Use it responsibly — fair service charges and good maintenance protect your rental income too.

Step 5: Get Flats Rent-Ready

New flats still need work before tenants move in:

• Fix all snag-list defects first.
• Install curtain rails, geysers, kitchen exhaust, light fittings and fans if not provided.
• Consider AC points and IPS or generator connectivity — increasingly expected in new buildings.
• Clean thoroughly after construction dust.
• Take dated photos of each flat for the move-in checklist.
• Prepare a standard rental agreement for all family flats.

Step 6: Set Rent and Terms Consistently

Several flats of similar size in the same new building create a natural "benchmark" — for you and for tenants. If each sibling asks a very different rent for identical flats, tenants will play one against another. Agree a common rent range, advance and deposit policy, service charge approach and pet/visitor rules for the family's flats. Base the rent on comparable new buildings in the area, adjusted for floor, view and parking.

Worked Example: Splitting Rental Income Among Heirs

For example (illustrative): Four siblings jointly received 8 flats as the landowners' share. They keep 2 flats for family use (one sibling and their mother), and let 6 flats at Tk 28,000 each. They agree that all rent goes into one joint account, expenses are paid from it, and the net is shared equally among the four siblings, with a fee for the sibling who manages everything.

The family also needs a rule for the 2 family-used flats — for example, whether the sibling living in one pays notional rent into the pool, or whether all agree it is rent-free. Writing such rules down, even informally, avoids resentment years later. If shares are unequal under inheritance, the split must follow the agreed or legal shares rather than equal division; take advice on inheritance shares.

Tax and Records

Rental income from these flats is taxable income of the owner(s) under the Income Tax Act, 2023. Where flats are jointly owned, each co-owner generally reports their share. How signing money, compensation received from the developer, and the transfer of land in exchange for flats are treated for tax purposes can be complex; consult a tax lawyer rather than assuming. Keep:

• Rental agreements and rent receipts for each flat
• Service charge, holding tax and repair receipts
• Bank statements of the joint account
• A yearly income and expense summary for each owner

This is general information, not tax advice.

Commercial Units and Parking in Your Share

Many land-sharing agreements give the landowner a share of ground-floor shops or car parking as well as flats. These are treated differently from residential flats:

• Shops usually attract higher rent, larger advances and sometimes salami, but need a commercial lease, a clear policy on signboards and business hours, and attention to how they affect residents (noise, smells, crowds).
• Extra parking spaces can be let separately to other residents of the building or neighbours, often on a monthly basis. Record them as separate units so income is not missed.
• Rooftop rights may be common property of all owners; check the association rules before letting roof space for telecom towers or signage.

The First 90 Days After Handover

1. Days 1–15: Inspect every flat, prepare and send the snag list, collect all keys, meter details and the handover letter.
2. Days 15–45: Follow up on defect repairs; transfer utility meters; agree family management rules; open a joint rent account.
3. Days 30–60: Finish rent-ready work; photograph flats; agree rent and terms; start marketing.
4. Days 60–90: Screen tenants, sign agreements, submit tenant information where required, and set up a monthly billing and reporting routine.

Common Mistakes

• Accepting handover without a snag list. Defects discovered after tenants move in are harder to get fixed and upset tenants.
• Leaving co-ownership undefined. "We'll sort it out later" often turns into years of family disputes.
• No written family management rules. Who pays for repairs? Who decides on tenants? Put it on paper.
• Mixing rent with personal money. A joint account and simple ledger keep things transparent.
• Undercutting each other. Siblings competing for tenants in the same building lowers everyone's rent.
• Ignoring the association. Unpaid service charges and rule breaches by tenants create friction with other owners.
• Letting utility meters remain in the developer's name. Transfer them promptly to avoid billing disputes.

Final Thoughts

A land-sharing deal can turn a single old house into a portfolio of modern rental flats. Getting the most from it depends on a careful handover, clean ownership documents, clear family management rules, a good relationship with the owners' association, consistent rents and transparent accounts.

When several relatives share income from many flats, clear records are what keep the peace. Bariwala ERP (বাড়িওয়ালা ERP) lets you set up the building by floor and unit, keep tenant profiles and agreements, issue monthly invoices and receipts, track dues and record income and expenses with reports — so every co-owner, including those abroad, can see the same numbers.