Rent agreement is a type of contract of rental, which is generally written between the property owner and a renter who wants to get provisional possession of the property.

In India, it’s completely lawful and valid to make an 11-month rent agreement. Such rent agreement is considered as completely authentic and can be produced to court once required as a valid piece of evidence. While drafting an 11-month rent agreement tenants do not require to pay any cost for the registration purpose. Whether you’re a tenant or landlord it’s always good to opt for an 11-month rent agreement because of its cost-effective and hassle-free nature.

If a landlord is willing to make a verbal commitment, so is there any requirement to create a rent agreement?

Rent Agreement: Everything you need to know about rent agreements

A verbal commitment does not have any legal validity, and in such case, either party can breach the said terms and conditions. In such a case, the opposing party can’t take any action for it. Having a written contract can support you with legal validity. So one must always go for a written rent agreement.

Types of Rent Agreements

In India, there are mainly 2 types of rental contracts we can see –

  • Lease agreements with a minimum of 12 months. This one is covered by rent control laws.
  • Lease and license agreements of up to 11 months.

Difference between Rent and Lease

Rent refers to the regular payment of rental, which expires after a one-month duration and at the end of which it is renewed automatically. On the other hand, lease refers to the conveying of land or property to another for a stated term or period.

Rent Agreement Format

Below are a few common points that a rent agreement should have:

  • Name of the landlord and tenant along with the agent (if any)
  • Description of the property
  • Details about the rent (amount, due date, late charges, mode of payment etc.)
  • Procedures of terminating the agreement before the ending date and charges if anything applies
  • Information regarding the security deposit
  • Amenities that tenant can get within the premises
  • Rules and regulations that need to be followed along with the penalties once violated
  • Additional facilities like parking and others

Commonly used terms in a rent agreement

Duration – Time for that the agreement will be valid

Rent – The amount of payment made by the tenant to the landlord in exchange for the rented property

Deposits – The reason for the deposits along with conditions for return need to be mentioned if there is any requirement of making any deposit.

Terms of use – All the terms and conditions for using the property.

Insurance – In most of the commercial rent agreement cases the tenants need to insure the property.

Repairing and maintenance – terms and conditions for repairing and maintenance of the property, both for the landlord and tenant.

Documents required for a rent agreement registration

Any rent agreement in India requires the below documents for the registration process –

  • Original copy as a proof of the ownership or a copy of the title of the property
  • Tenant and landlord along with two witnesses need to provide 2 passport sized photographs
  • Aadhaar card
  • ID Proof (Voter ID, passport and driving license)
  • In case the tenant is a registered company, the company must provide an authorization letter as evidence.

Stamp duty on rental agreement

For registering a rent agreement, one should pay stamp duty for it. The amount of stamp duty varies from city to city in India.

Below table is showing the stamp duty in the rental agreement in different states in India:

States Agreement time Amount of stamp duty
Delhi Up to 5 years 2%
Noida Up to 11 months 2%
Karnataka Up to 11 months 1% of the total rent + deposit paid annually or Rs 500, whichever is lesser
Tamil Nadu Up to 11 months 1% of rent + deposit amount
Uttar Pradesh Less than a year 4% of annual rent + deposit
Maharashtra Up to 60 months 0.25% of the total rent
Gurgaon Up to 5 years 1.5% of the average yearly rent
Gurgaon 5-10 years 3% of the average yearly rent

Electronic stamping

e-Stamp paper or electronic stamp paper is the result of electronic stamping which is an online application through which Stamp Duty can be securely paid to the Government. As all of us would already know, the most common use of stamp papers is for creating rental agreements

Stamp duty can be securely paid to the Government through online using the e-Stamp paper or electronic stamp paper.

In 2000 Govt. has appointed the Holding Corporation of India Ltd (SHCIL) for implement and over see e-Stamping operations. The SHCIL is also been given the responsibility of keeping track of all e-Stamp papers issued in the country.

At present, the below states in India allow the e-Stamping process – Assam, Gujarat, Himachal Pradesh, Karnataka, Maharashtra, Delhi-NCR, Tamil Nadu, Uttarakhand and Uttar Pradesh.

For getting a rental agreement printed on e-Stamp paper, first, you need to buy an e-Stamp paper from any selected centres in your city. Then you have to write or print your rental deed over the e-Stamp paper, following which, the executants, namely the tenant and the landlord, should place their signatures at selected places along with the signatures of two eyewitnesses. This makes the contract, lawfully binding.

Do you any further clarification or professional support for rent agreement? Contact FinacBooks now. Our experts will be happy to help you.

Share this post