A rent agreement in India should identify the parties and premises precisely, state the term, rent, escalation and security deposit, and allocate responsibility for maintenance, repairs, utilities and taxes. It must be executed on stamp paper of the value prescribed by the relevant State. Most residential agreements are written for 11 months, because a lease of immovable property from year to year, or for a term exceeding one year, requires registration under the Registration Act, 1908. In Maharashtra and some other States, a leave and licence agreement is used instead of a lease and carries its own registration requirement.
If you are drafting rather than downloading, four clauses decide almost every dispute that follows: lock-in, notice period, maintenance allocation and deposit deduction. Everything else is structure.
Lease or licence: the decision that comes first
Before drafting a single clause, decide which instrument you are drafting. Getting this wrong undermines everything after it.
A lease transfers an interest in the property, a right to enjoy it with exclusive possession for a term. It is governed by the Transfer of Property Act, 1882.
A leave and licence grants only permission to use the premises, without transferring any interest and without exclusive possession in the legal sense. The licensor retains legal possession.
| Basis | Lease | Leave and licence |
|---|---|---|
| Nature | Transfers an interest in the property | Bare permission to occupy |
| Possession | Exclusive possession to the tenant | Legal possession stays with the owner |
| Governing law | Transfer of Property Act, 1882 | Indian Easements Act, 1882 |
| Transferable | Generally yes, unless barred | Personal to the licensee |
| Recovering the premises | Can be slower, tenant protections may apply | Generally simpler on expiry |
| Common usage | Commercial tenancies, longer terms | Residential lettings, especially Maharashtra |
Owners generally prefer licences because rent control legislation in several States confers protections on tenants that can make recovering possession difficult and can cap recoverable rent. A licence is intended to sit outside that framework.
The drafting warning matters more than the preference. Courts look at substance, not the label on the first page. Calling a document a leave and licence agreement while granting exclusive possession for a long term, with a transferable right and no owner access, may still be construed as a lease. If you want a licence, draft a licence: retain access rights, keep the term short, make it personal to the licensee, and avoid language of demise. This is one of the basic principles of legal drafting that separates a document that works from one that merely looks right.
Why almost every rent agreement runs for 11 months
This is the most asked question on the topic, and the answer is procedural rather than superstitious.
Under Section 17 of the Registration Act, 1908, leases of immovable property from year to year, or for a term exceeding one year, or reserving a yearly rent, require compulsory registration. An 11 month term falls outside that requirement. The same provision is what makes registration compulsory for documents relating to the sale of immovable property, which is why the two are often confused.
The consequences of the 11 month convention:
- Lower cost and less process. No compulsory registration for the lease itself, and generally lower stamp duty.
- Easier renegotiation. Rent resets annually by renewal rather than by an escalation dispute.
- Rent control distance. Shorter terms are less likely to attract statutory tenancy protections.
Two qualifications matter, and both are routinely missed.
An unregistered agreement has limited evidentiary value. An instrument that required registration and was not registered generally cannot be received in evidence of the transaction it records. Even where registration is not compulsory, a registered agreement is materially stronger if you ever need to prove terms in court.
Some States require registration regardless of term. Maharashtra requires registration of leave and licence agreements irrespective of duration. Do not apply the 11 month rule as though it were national. Check the State.
The Model Tenancy Act, 2021 is also relevant here. The Centre circulated a model law proposing written agreements filed with a Rent Authority, deposit caps, and defined timelines for possession. It is a model, so it takes effect only where a State adopts and notifies it, and adoption has been uneven. Where it applies, it changes the compliance position materially.
Stamp duty and registration
Both are State subjects, and both vary. There is no single figure that is correct across India.
Stamp duty on a rent or licence agreement is typically calculated with reference to the rent for the term, sometimes with the security deposit factored in, at rates set by the State’s stamp legislation. Some States apply a flat amount for short residential terms, others use a percentage.
Registration fees are separate from stamp duty and also set by the State.
Three practical points for the drafter:
- State expressly who bears stamp duty and registration cost. Silence produces argument.
- e-stamping is available in many States and is now the norm in several.
- Where registration is required, both parties must ordinarily attend before the Sub-Registrar, or attend through a duly authorised attorney-holder. If the landlord is abroad, this is done through a power of attorney that expressly authorises admitting execution and registration.
Verify the current rate for the relevant State before execution rather than relying on any figure published online, including in this article. Rates change with State budgets.
The clauses, and what each one is really for
Each clause below states what it does and where it goes wrong.
1. Parties. Full names, ages, parentage or spouse names, complete addresses, PAN. For companies, the registered office and the authority of the signatory. Failure point: letting by one co-owner without the others’ authority. Check title and confirm every owner is a party or has authorised the signatory.
2. Premises. A complete description in a schedule: flat number, building, floor, carpet or built up area, survey number, society name, full address, and what is included such as parking slot number, terrace or storage. Failure point: parking. It is the most common post-signature dispute in Indian residential lettings and it is usually absent from the document.
3. Term and commencement. Exact start and end dates. Say whether possession is given on the start date or earlier. Failure point: an agreement dated one day and possession given another, with rent liability unclear for the gap.
4. Rent, due date and mode. Amount in figures and words, due date, payment mode, bank details. Specify what happens on late payment, with a grace period and an interest or late fee rate. Failure point: no late payment consequence, which leaves the landlord with only termination as a remedy.
5. Escalation. For agreements that renew, state the escalation percentage and when it applies. A fixed percentage is cleaner than “as mutually agreed”, which is not a term at all.
6. Security deposit. Amount, when refundable, and critically what may be deducted from it. Specify unpaid rent, unpaid utilities, and damage beyond normal wear and tear. Add a timeline for refund after handover, and state whether the deposit carries interest. Failure point: deposit deduction with no agreed basis is the single largest source of landlord and tenant disputes in India. Draft this clause properly and you eliminate most of the risk.
7. Maintenance and society charges. Allocate every recurring charge explicitly: society maintenance, sinking fund, property tax, non-occupancy charges. Failure point: non-occupancy charges levied by co-operative societies on rented flats, which nobody discusses until the first bill arrives.
8. Utilities. Electricity, water, gas, internet: who pays, and how meter readings are recorded at handover and at exit. Record opening meter readings in a schedule.
9. Repairs. The standard split is that the landlord handles structural and major repairs and the tenant handles minor and day to day repairs. Define the boundary with a monetary threshold rather than the words “major” and “minor”, which mean nothing in practice.
10. Permitted use. Residential only, or commercial, or specified professional use. State the number of occupants if that matters. Failure point: residential premises used commercially, in breach of society rules or municipal permissions.
11. Lock-in period. The minimum period during which neither party may terminate. State the consequence of early exit, usually forfeiture of a stated number of months’ rent. Failure point: a lock-in with no stated consequence, which is unenforceable in substance.
12. Notice period and termination. Notice length for each party, whether notice may be given during the lock-in, and the grounds for immediate termination. Termination clauses in Indian contracts fail most often because they state a right to terminate without stating the process for exercising it.
13. Subletting and assignment. Ordinarily prohibited without written consent. In a licence agreement, make the right expressly personal to the licensee.
14. Landlord’s right of access. Right to inspect on reasonable prior notice, stated in hours or days. This is not merely practical. For a leave and licence, retained access supports the characterisation as a licence rather than a lease.
15. Alterations. No structural alteration without written consent, with a restoration obligation on exit.
16. Handover and exit condition. The condition in which the premises must be returned, an inventory of fixtures and appliances scheduled to the agreement, and a joint inspection on exit. Failure point: no inventory, so no way to prove what was damaged.
17. Dispute resolution and jurisdiction. Name the courts with jurisdiction, or include an arbitration clause with the seat specified. Along with notices, severability and governing law, these are the boilerplate clauses that get copied without thought and then decide where and how a dispute is fought.
18. Registration and costs. Who bears stamp duty, registration fee and any facilitation cost, and who attends registration.
Sample: residential rent agreement skeleton
A structural outline, not a completed document. Adapt to the State and to the transaction.
RENT AGREEMENT (or LEAVE AND LICENCE AGREEMENT, as appropriate)
This Agreement is made at ………… on this …… day of …………, 20……
BETWEEN [Name], aged ……, [relation] of …………, PAN …………, residing at ………… (the “Landlord” or “Licensor”)
AND [Name], aged ……, [relation] of …………, PAN …………, residing at ………… (the “Tenant” or “Licensee”)
WHEREAS the Landlord is the absolute owner of the premises described in Schedule I (“the Premises”);
AND WHEREAS the Tenant has approached the Landlord to take the Premises on rent for residential use, and the Landlord has agreed on the terms below;
NOW IT IS AGREED AS FOLLOWS:
- Premises. As described in Schedule I, together with the fixtures listed in Schedule II.
- Term. 11 months commencing ………… and ending …………, renewable by mutual written agreement.
- Rent. Rs. ………… (Rupees ………… only) per month, payable in advance on or before the …… day of each month by bank transfer to the account in Schedule III.
- Late payment. A grace period of …… days, after which interest at ……% per month applies.
- Escalation. On renewal, rent shall increase by ……%.
- Security deposit. Rs. …………, paid on execution, refundable within …… days of handover, subject to deduction only for (a) unpaid rent, (b) unpaid utility or society charges, (c) damage beyond normal wear and tear. No interest payable.
- Maintenance and taxes. Society maintenance payable by …………; property tax by the Landlord; non-occupancy charges by …………
- Utilities. Electricity, water and gas payable by the Tenant per actual consumption. Opening meter readings recorded in Schedule IV.
- Repairs. Structural and major repairs exceeding Rs. ………… by the Landlord; repairs below that value by the Tenant.
- Use. Residential purposes only, by not more than …… occupants. No commercial or unlawful use.
- Lock-in. …… months from commencement. Early termination by either party within lock-in attracts payment of …… months’ rent.
- Notice. …… months’ written notice by either party after the lock-in period.
- Immediate termination. On non-payment of rent for …… consecutive months, unlawful use, or breach not remedied within …… days of written notice.
- No subletting or assignment without the Landlord’s prior written consent.
- Access. Landlord may inspect on …… hours’ prior written notice.
- No alterations without prior written consent. Tenant to restore on exit.
- Handover. Premises to be returned in the same condition, wear and tear excepted, with a joint inspection against Schedule II.
- Jurisdiction. Courts at ………… shall have exclusive jurisdiction.
- Costs. Stamp duty and registration charges borne by …………
SCHEDULE I. Description of the Premises SCHEDULE II. Inventory of fixtures and appliances SCHEDULE III. Bank account details SCHEDULE IV. Opening meter readings
Landlord: ………… Tenant: ………… Witness 1: ………… Witness 2: …………
The five clauses that cause most disputes
If you have limited time with a client, spend it here.
Security deposit deduction. No agreed basis means an argument at exit, every time. Specify the permitted deductions.
Lock-in without consequence. A lock-in clause that does not say what happens on breach gives you nothing.
Maintenance allocation. “Major” and “minor” are not drafting terms. Use a rupee threshold.
Parking. Omitted from most agreements, disputed in a large share of tenancies. One line in Schedule I.
No inventory. Without Schedule II and a joint inspection, neither party can prove the condition of anything. This sits alongside the other common mistakes made while drafting business contracts: omissions cause more litigation than badly worded clauses.
When the tenancy goes wrong
Two situations account for most of what follows a badly drafted agreement.
Non-payment or refusal to vacate. The usual first step is a written demand followed by a formal notice. Drafting a legal notice to a tenant to vacate requires the agreement to be precise on notice periods and grounds. Where the agreement is vague, the notice inherits that vagueness and the tenant’s reply will say so.
Deposit withheld at exit. Where the agreement specifies permitted deductions and an inventory exists, this resolves quickly. Where it does not, it becomes a small claim that costs more to pursue than the deposit is worth.
Note that a rent agreement for a residential flat in a project registered under RERA sits alongside, and does not replace, the developer’s obligations. If you act on the ownership side of such transactions, the key provisions of the Real Estate (Regulation and Development) Act, 2016 govern the sale, while the rent agreement governs only the letting that follows.
Learning to draft this from a blank page
Downloading a template is easy. Knowing which clauses to change for a particular client, which State rules apply, and which four clauses will decide a future dispute is the professional skill, and it is not taught in most law degrees.
LawMento’s Practical Training in Drafting of Contracts covers lease and rent agreements in Module 6, alongside agreement to sale, sale deed, gift deed and mortgage deed, with commercial lease drafting in Module 7. Across 26+ hours you draft 30+ contract types with 230+ pages of study material.
If your work touches property regularly, the RERA and Real Estate Laws course covers the regulatory side, including compliance, agreements for sale and allotment, and real estate disputes, which sits directly alongside the drafting work.
For the wider skill, our guide on how to improve legal drafting skills sets out how to build the habit of drafting for the dispute that has not happened yet.
Use code SAVE10 at checkout for 10% off any LawMento course.
FAQs
Why are rent agreements in India made for 11 months?
Because leases from year to year or exceeding one year require compulsory registration under Section 17 of the Registration Act, 1908. An 11 month term falls outside that, reducing cost and process. Some States, including Maharashtra, require registration of leave and licence agreements regardless of term.
Is an unregistered rent agreement valid?
It may be valid between the parties, but an instrument that required registration and was not registered generally cannot be received in evidence of the transaction. A registered agreement is significantly stronger if terms are ever disputed.
Is a notarised rent agreement enough?
Notarisation evidences execution. It is not registration, and where registration is compulsory it is no substitute.
What is the difference between a rent agreement and a leave and licence agreement?
A lease transfers an interest in the property with exclusive possession. A licence gives only permission to occupy, with legal possession retained by the owner. Courts look at the substance of the rights granted, not the title of the document.
Who pays stamp duty on a rent agreement?
Whoever the agreement says. In practice it is commonly the tenant, or shared. Because it is negotiable, state it expressly.
Can a landlord increase rent during the term?
Not unilaterally, unless the agreement provides for it. Escalation must be a term of the contract, which is why the escalation clause matters.
How much security deposit is normal in India?
It varies widely by city and property type, from roughly one to several months’ rent, and is generally a matter of negotiation rather than statute. Where a State has adopted the Model Tenancy Act, deposit caps may apply.
Does a rent agreement need witnesses?
Two witnesses is standard practice and is expected on registration. Include the clause and the signature blocks.
This guide explains general drafting requirements and is not legal advice for any specific tenancy. Stamp duty, registration requirements and rent control legislation vary by State and change over time, and the Model Tenancy Act, 2021 applies only where a State has adopted it. Verify the current position for the relevant State before executing any agreement.
