Understanding Rent Agreement Terms in India: A Complete Guide

Renting a home in India starts with finding the right place. Once you’ve found it, understanding the rent agreement is crucial. This document can be intimidating with its legal jargon, but whether you’re new to renting or experienced, it’s essential to know what you’re agreeing to. OLX not only helps you find rental homes but also offers resources to help you understand rental agreements better. 

What is a Rental Agreement? 

A legal document that acts as a contract between the landlord and the tenant is called a rental agreement. It states the tenancy’s terms and conditions, including the amount of rent due, the security deposit required, the duration of the lease, maintenance and repairs, termination and renewal policies, and other significant aspects.

Types of Rental Agreements in India 

There are four main types of rental agreements in India – Commercial Rental Agreements, Residential Rental Agreements, Single Room Rental Agreements, and Shared Rental Agreements.

Commercial Rental Agreements

Lease agreements that are exclusively used for business reasons are known as commercial rental agreements (CRAs). These contracts are used to lawfully rent out or lease commercial real estate to and from different people or companies. Commercial rental agreements, in comparison to residential ones, are not meant for personal use but rather for use in business-related operations.

Rental Agreements 

The conditions and details of your tenure, as well as the responsibilities of the landlord and tenant, are described in your residential rental. Anyone wishing to rent a house, flat, or other type of property for a set amount of time must first sign a residential rental agreement. For example, before moving into a flat, families seeking to live there must prepare this document.

Also Read: How To Rent A House In India

Rental Agreements for Single Rooms

An agreement for the leasing of a single room in a shared home or apartment is known as a single-room rental agreement. People who value independence and privacy prefer this option, which can also be a budget-friendly living choice.

Agreements for Shared Rentals

A shared rental agreement is a written agreement between two or more individuals who want to live together. People who want to lower their cost of living frequently select this kind of agreement. The rental agreement contains all of the terms and conditions of the arrangement and is meant to be a future reference for both parties. For example, someone renting a three-bedroom apartment with only two occupants might lease the third room to share costs effectively.

Documents Required for Rental Agreement in India 

For the rental agreement, landlords and tenants must submit evidence of identity, proof of address, and current passport-size photos. Depending on the state and location where the rental agreement is being performed, different documentation may be needed.

For the lessor and the lessee

• A lawful government-issued photo identity proof, such as a passport, driver’s license, or Aadhaar card, serves as identification proof.
• Proof of Address: Utility bills, passports, and Aadhaar cards are examples of documents that prove your address.
• Passport-sized photos: Current passport-sized photos should be included with the rental agreement.

It’s essential to remember that the precise paperwork needed may change based on the state and location where the rental agreement is being signed. For more advice, it is therefore advised that you speak with a legal expert.

Read More: How to Find the Best Flats for Rent in Pune

Information to Be Added to a Rental Agreement

• The agreement contains the names and addresses of the tenant and landlord.
• To be legally binding, the agreement must be signed by both parties.
• The monthly rental payment and additional fees are mentioned.
• Terms and amount of security deposit are specified.
• The length of stay and the start and end dates of the tenancy are included.
• The rights and responsibilities of the landlord are described (maintenance, repairs, and entry rights).
• Tenant rights and responsibilities (cleanliness, property maintenance, privacy rights) are specified.

How Do You Draft a Rental Agreement?

• Collect all relevant data: Gather any relevant information, including names, addresses, and phone numbers, regarding the landlord, tenant, and property.
• Choose the conditions that apply: Choose the conditions of the contract, including the length of stay, security deposit, and rental price, among other things.
• Make a draft: Make a draft of the rental agreement with all the required information and provisions included.
• Examine and conclude: Together with the renter, go over the draft and make any required revisions. Complete the agreement once all parties have agreed to its provisions.
• Carry out the agreement: The final agreement should be printed out and signed by both parties in front of witnesses.

Rent agreement stamp duty

The city where the agreement is recorded will determine how much you owe the government. You can pay this duty by buying the necessary amount of stamp paper. In the case of Delhi, stamp duty on rentals for a maximum of five years is equal to 2% of the average yearly rent. In Noida, the stamp duty for rental contracts lasting up to eleven months is two percent of the total annual rent. When you are planning your rental agreement budget, remember to account for the expense of stamp duty!

Final Remarks 

Understanding your rent agreement is fundamental to ensuring a stable and legal tenancy. By understanding the key terms and clauses described above, you can protect your interests and avoid disputes. Remember, every clause in a rent agreement serves a purpose, and being well-informed is your best defense against future rental issues. 

OLX helps to find your next rental property and arm yourself with the knowledge to make your renting experience as smooth as possible.

Frequently Asked Question

Is a rental agreement required?

No, it’s not required to have a rent agreement. To prevent any disagreements in the future, a written agreement is advised.

Is it possible to extend the lease?

Yes, with both parties’ cooperation and after the lease, the rent agreement may be renewed.

Which documents are required to register a rental agreement?

Property records, verification of both parties’ identification and residence, and passport-sized photos of both parties are required to register a rental agreement.

How is rent agreement stamp duty computed?

The length of the lease and the property’s average yearly rent are used to understand the stamp duty on rental agreements.

Can a landlord increase the rent during the tenancy period?

As a rule, landlords can raise the lease with satisfactory notification, as determined in the tenant contract and nearby lease control regulations. Be that as it may, the increment cannot be impulsive and should conform to lawful prerequisites.