All you need to know about Tenancy Agreements in India

The tenancy agreement is the official agreement made between the landlord and the tenant. It serves as an official document that enumerates the arrangements between landlords and tenants.

In a dispute, this tenancy agreement comes in handy. It also protects the interests of landlords and tenants by chalking out the detailed agreement in writing. 

3 Types of Tenancy Agreements in India

There are three types of tenancy agreements in India. All three documents require you to fill in basic details about yourself. It also contains information about the real estate owner, the prospective tenant, term of occupation, and the rent amount to be paid. 

The three types of tenancy agreements in India:

• Rent agreement

The rent agreement is the official contract between the landlord or real estate owner and the tenant. Rent agreements give detailed information about the rent to be charged for taking temporary possession of the property. It outlines the dos and don’ts for the tenant. 

A rent agreement is a necessary document. Since it is in writing, the document serves as proof in case of violation of rights or any breach in the agreement. Rent agreements are valid for a short period of time, typically 11 months in India. The Indian government has not yet made rental agreements mandatory, but it is important to have an agreement in writing to safeguard individual interests.

Rent agreements in India outline the responsibilities and rights of both the landlord and the tenant.

• Lease agreement

Lease agreements in India are valid for a longer period of time, as opposed to rental agreements. For instance, a lease agreement could last for years. It is therefore legally binding, unlike the rent agreement, which is not yet compulsory for Indians. 

The lease is transferable and can be inherited. The terms of a lease agreement, therefore, are different from that of a simple rent agreement. It needs to be stamped and officially registered to be upheld in court. Lease is a profitable option for tenants as rent agreements do not allow commercial use of the rental property. It is not revocable by the landlord, but the parties involved have the Power of Attorney.

• Leave and license agreement.

The leave and license agreements are very different from typical rent and lease agreements. The property does not involve a tenancy agreement and is non-transferable. It falls under the section of the Indian Easement Act 1882, which gives the license holder authority to occupy the property of the Licensor.

The leave and license agreement can be revoked by the landlord (Licensor). It makes eviction of the occupier easier, and the occupier does not have any property rights. In this case, the real estate owner has an advantage.

You cannot inherit the leave and license agreement. Moreover, the agreement is impacted by the sale of a property. It is not necessary to specify the rent amount as opposed to rent or lease agreements. 

Rent agreement format in India

Most Indians are typically concerned with rent agreements. It is signed for a period of 11 months to avoid stamp duty and other costs. A typical format for rental agreements in India would include the following:

• Names, addresses, and other details of the landlord and prospective tenant.
• The rental amount needs to be specified. It includes any security deposit and maintenance charges.
• The rent agreement must outline the agreed-upon period of stay.
• Rights or responsibilities of landlord and tenant.
• The number of occupants, visiting hours, and rules on subletting can also be added.

Stamp duty charges for tenancy agreement

Stamp duty charges for tenancy agreements vary according to the region. For instance, the stamp duty in Delhi is payable at 2% of the average annual rent. The time period can extend up to five years in the case of lease agreements.

E-stamping facilities are also available for tenancy agreements in certain states. Though not yet as popular, e-stamping does not require you to buy the stamp paper physically. You can check for the availability of this facility in your state by visiting the website of Stock Holding Corporation of India Ltd.

Rental properties in India have become a popular investment for real estate owners. More property owners are looking into profitable rent arrangements with responsible tenants. It is therefore prudent to have a solid tenancy agreement to avoid any confusion about the terms.

Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.