What is a Rent Agreement? Guide for India

A Rent Agreement (also called a lease agreement) is a legally binding contract between a landlord/owner and a tenant/occupant for the use of property in return for rent.
It sets out rights, duties, and safeguards for both parties, reducing the risk of disputes.
This article explores how rent agreements are created, what clauses are legally valid, execution requirements, and precautions for owners and tenants.

1. How Rent Agreements Are Created in India

Drafting: The landlord and tenant mutually agree on rent, duration, deposit, etc.
Stamp Duty & Registration: Must be executed on stamp paper. Agreements of 12 months or more must be registered under the Registration Act, 1908.
Execution: Signed by landlord, tenant, and two witnesses.
Police Verification: Mandatory in some states; advisable in all cases.
Many parties opt for 11-month agreements to avoid compulsory registration.

2. Essential Clauses Valid in Law

A valid agreement should include:

Parties & Identification: Details of landlord and tenant with ID proofs.
Property Description: Address, type, size, and fixtures.
Rent & Payment: Amount, due date, mode of payment.
Security Deposit: Amount, refund terms, deductions.
Duration: Start and end dates, renewal terms.
Maintenance & Repairs: Allocation of responsibility.
Use of Property: Residential or commercial, subletting restrictions.
Termination & Notice: Generally 1–3 months’ notice.
Rent Increase Clause: Annual hike (e.g., 5–10%).
Breach of Agreement: Grounds for eviction.
Dispute Resolution: Court jurisdiction or arbitration.

3. Rights & Precautions

Landlord/Owner:

Verify tenant background (police verification).
Insert restrictions (no structural changes, no illegal use).
Ensure clear deposit and maintenance terms.

Tenant:

Verify landlord’s ownership.
Ensure legal use (residential/commercial).
Keep rent and deposit receipts.
Confirm fair deposit refund and maintenance terms.

4. Stamp Duty & Agreement Value

Stamp duty: Varies by state (generally 1–2% of annual rent + deposit).
Registration fee: Typically 1% of annual rent + deposit.
11-month agreements often use stamp paper of ₹100–₹500.
Undervaluation can attract penalties.

5. Execution Checklist

Draft on proper stamp paper or e-stamp.
Signed by landlord, tenant, and two witnesses.
Register if term ≥ 12 months.
Retain copies of signed agreement.

6. Other Relevant Points

Police Verification: Often mandatory.
GST: Applicable on commercial rent exceeding threshold.
Eviction Rules: Governed by state-specific Rent Control Acts.
Digital Agreements: e-stamping and online registration available in many states.

7. Model Rent Agreement Template (11 Months)

RENT AGREEMENT


This Rent Agreement is made on this [Date] between:


(1) Mr./Ms. [Landlord Name], aged __, residing at [Address] (hereinafter called the "Landlord");


and


(2) Mr./Ms. [Tenant Name], aged __, residing at [Address] (hereinafter called the "Tenant").


WHEREAS the Landlord is the absolute owner of the premises located at [full address] ("the Property"); and
WHEREAS the Tenant has agreed to take the said premises on rent for residential purposes;
NOW, THIS AGREEMENT WITNESSES AS FOLLOWS:


1. **PROPERTY**: The Landlord lets the Property to the Tenant together with fixtures, fittings, furniture (if any), as per the inventory annexed.


2. **TERM**: 11 months commencing from [start date] to [end date]. Renewal terms, if agreed, shall be executed through a fresh agreement.


3. **RENT**: The monthly rent shall be Rs. [amount], payable in advance on or before the [date] of each month by [bank transfer/cheque/UPI]. Delay beyond [x] days shall attract late fees of Rs. [amount] or interest @ [x]% per month.


4. **SECURITY DEPOSIT**: The Tenant shall deposit Rs. [amount] as refundable security deposit. The Landlord may deduct for unpaid rent, damage beyond normal wear and tear, or unpaid utilities. Refund shall be made within 30 days of handing over vacant possession.


5. **MAINTENANCE & UTILITIES**:
- Tenant shall bear charges for electricity, water, gas, internet, DTH, and other consumables.
- Landlord shall bear property tax and major structural repairs (roof, walls, permanent fixtures).
- Society maintenance charges [specify division between parties].


6. **USE OF PROPERTY**: The Tenant shall use the Property strictly for residential purposes. Running any trade, business, or illegal activity is prohibited. Subletting or assignment without Landlord’s written consent is not allowed.


7. **ALTERATIONS**: The Tenant shall not make structural alterations or additions without prior written consent. Any authorized fixtures/improvements shall vest with the Landlord at termination without compensation.


8. **INVENTORY & CONDITION**: An inventory of fixtures/fittings has been signed and forms part of this Agreement. The Tenant shall return the Property in the same condition, subject to normal wear and tear.


9. **RENT ESCALATION**: Upon renewal, rent may be increased by [5–10%] or as mutually agreed.


10. **LOCK-IN PERIOD**: Both parties agree to a lock-in period of [x months]. Early termination by the Tenant during this period shall result in forfeiture of [1/2] month’s rent/security deposit.


11. **TERMINATION**: Either party may terminate this Agreement by giving [1/2/3] months’ written notice. The Landlord may terminate earlier for breach of terms, non-payment of rent, or illegal use.


12. **ENTRY & INSPECTION**: The Landlord may inspect the Property with [24/48 hours] prior notice at reasonable times.


13. **TENANT’S OBLIGATIONS**:
- Pay rent and utilities on time.
- Maintain cleanliness and not cause nuisance to neighbors.
- Not store hazardous materials.


14. **LANDLORD’S OBLIGATIONS**:
- Ensure peaceful possession of the Tenant.
- Carry out major repairs not caused by Tenant’s negligence.


15. **DISPUTE RESOLUTION**: Any disputes shall be subject to jurisdiction of courts at [City]. Optionally, disputes may be referred to arbitration under the Arbitration and Conciliation Act, 1996.


16. **FORCE MAJEURE**: Obligations shall be suspended in case of events beyond control (natural disasters, government restrictions, etc.).


17. **GOVERNING LAW**: This Agreement shall be governed by the laws of India and applicable state laws.


IN WITNESS WHEREOF, the parties hereto have signed on the day, month, and year first above written.


Landlord: ____________________
Tenant: ____________________
Witness 1: ____________________
Witness 2: ____________________