Lease Rental Discounting

General

How does lease rental discounting (LRD) work?

Lease Rental Discounting (LRD) is a type of loan against rental income offered on commercial properties that are leased out to tenants. The loan is sanctioned based on the future rent receivables from your property. The Equated Monthly Instalment (EMI) is automatically serviced from the rental inflows that are directly deposited into ICICI HFC.

How is LRD different from a regular LAP?

A regular Loan Against Property (LAP) is evaluated based on your personal income and the property’s market value. In contrast, an LRD loan—also known as a loan against rent receivables—is assessed primarily on the strength of your lease agreement and future rental income. The sanctioned amount is determined by the Net Present Value (NPV) of your future rent collections.

How do I know if my property is eligible for LRD?

To qualify for a lease rental discounting loan, your property must be a commercial asset such as an office space, warehouse, or retail outlet that is currently leased to a tenant under a valid, registered lease agreement. The tenant must be a reputable corporate entity, and all EMIs will be routed exclusively through an escrow account.

How does LRD apply to residential properties leased to corporates?

Lease rental discounting is available only for commercial properties. Residential properties, even if leased to corporate tenants, are not eligible for LRD loans or any loan against lease property.

Process

How do I apply for a lease rental discounting loan?

You can apply for an LRD loan either online or by visiting your nearest ICICI HFC branch. You’ll need to submit your lease agreement, proof of rental income, property documents, and your KYC and income proofs to initiate the loan against rental property process.

How is the LRD loan application processed?

The LRD loan process includes four key steps:

• Application login and document collection
• Credit appraisal, including rental income evaluation, CIBIL score, and FOIR checks
• Legal and technical verification of the property
• Loan disbursement after successful approval

Documents

What are the documents required for an LRD loan?

To apply for a loan on a lease property, you will need:

• PAN Card
• Aadhaar Card, Passport or Voter ID
• Registered lease agreement
• Proof of rental income, such as rent receipts or bank statements
• Property ownership documents
• Income proofs like ITR, GST returns, or business financials

How are rent receipts or bank credits used to verify rental income?

Rent receipts and bank credits help verify the regularity and authenticity of your rental inflows. They are matched against your lease agreement to ensure the rent amount and payment timelines are consistent, forming the basis for calculating the NPV of your future rent under the lease rental discounting loan process.

Eligibility

How is eligibility determined for a lease rental discounting loan?

Your eligibility for an LRD loan depends on several factors—your property’s type and market value, the validity and tenure of your lease agreement, and the consistency of your rental income. Additionally, your CIBIL score, FOIR, and the NPV of future rent receivables influence the final loan amount.

How can individuals and companies apply for LRD?

Both individuals and companies can apply for lease rental discounting. Applicants must provide KYC documents, a registered lease agreement, and complete income and property verification documents to qualify for the loan against rental property.

How much minimum lease tenure is required for LRD eligibility?

For eligibility under LRD, the lease agreement must have at least three years of remaining tenure from the date of the loan application. This ensures the continuity of rental income during the repayment period.

How does the rental yield affect LRD eligibility?

A higher rental yield enhances the NPV of your rent receivables, which in turn increases the eligible loan amount. The rental yield, supported by consistent rent credits and a strong lease agreement, plays a key role in determining how much funding you can secure through a lease rental discounting loan.