Rental leases generally last for 12 months, although many landlords opt for an 11 month lease to avoid rental control laws (see below). Rental leases can usually be easily extended or shortened if negotiated with the landlord in advance. Most rental leases require a minimum occupation period equivalent to the length of the lease.
Landlords will usually ask for a security deposit of up to 10 months’ rent, which will then be fully refunded when the rental lease expires and the accommodation is left in good condition. To protect against fraud and ensure return of the security deposit, the tenant should get the terms in writing and a receipt from the landlord.
If the tenant vacates a property early, the landlord should be given two to three months’ notice, or as stated in the rental agreement. Landlords will usually expect the tenant to either pay the remaining months of the lease or forego the security deposit.
A tenant can choose not to opt for a written rental agreement and be given the freedom to leave at any time, at the risk of losing the security deposit.
Paying the Rent
Rent is usually paid with cash or a cheque issued by an Indian bank. Bank transfers are not common in India, and most landlords do not accept this as a form of rent payment. Paying guest, serviced apartments and other short-term accommodation is paid for on a daily or weekly basis. Long-term accommodation is almost always paid monthly.
Landlords often include essential utility connections such as gas, electricity and water in their rental agreements. A landlord may include the rate in the monthly rent, or if an electricity connection only is included, then it is the landlord’s responsibility to provide the electrical card with the meter readings for the tenant to pay separately.
The same applies for water connections, depending on whether the accommodation is supplied with public water or groundwater from private bore wells. For a gas connection, it is the landlord’s responsibility to provide gas cylinders.
Phone, television and Internet connections are not usually provided by landlords. They are the tenant’s responsibility.
Sometimes a landlord will include certain lifestyle restrictions in a rental lease. The most common, especially in south India, is that non-vegetarian food cannot be prepared in the accommodation.
Subletting is not permitted unless with the landlord’s written consent. In most cases, such terms and restrictions in a rental lease can be easily negotiated with the landlord.
Landlords often take marital status into consideration when screening potential tenants. Bachelors and unmarried women may find it difficult to find accommodation without another person’s formal recommendation or testimony of good character. Accommodation specifically for bachelors is listed in print and online. Many landlords are still reluctant to rent accommodation to single women regardless of nationality.
A landlord may try to evade income tax payments and rental control laws by insisting on a verbal or informal agreement without an official rental lease. Accepting an informal rental agreement makes it extremely difficult to get official proof of residence. For new immigrants into India, a written rental lease is often the primary proof of residence used to obtain basic necessities like a Permanent Account Number (PAN Card), electricity, water, gas, phone and Internet.
Rental Control Laws
Rental control laws have been passed by each of the Indian state governments to prevent landlords from overcharging tenants and to protect tenants from sudden or unfair eviction.
These laws set a maximum rental rate and outline the specific circumstances in which a tenant can be evicted, such as subletting without permission, failure of payment or poor maintenance of the accommodation. Landlords must abide by these strict laws when they rent accommodation with a 12 month lease. Most landlords avoid rental control laws by either drafting 11 month leases or encouraging informal or verbal rental agreements.
For a tenant with a 12 month lease, a rent rate at or below market value is guaranteed. But it may be difficult to break the terms of the lease should the tenant have to leave early.
An 11 month lease gives both landlord and tenant more flexibility. The landlord can set the rent and terms according to the current market, and the tenant is less bound by the lease.
An agreement by which the owner of an immovable property/a person duly authorized by the owner or a competent person enters into a contract with another person for possession, enjoyment and use of the said property for a specified period and purpose against valid consideration is called ''Rent or Lease Agreement.'' The owner of the property is called ''Lessor'' and the person acquiring the right to enjoy/ use the property is called ''Lessee.''
A.3. Clause (c.)of Explanation to section 194I specifies the meaning of “Rent” means any payment, by whatever name called, under any lease, sub lease, tenancy or any other agreement or arrangement for the use of (either separately or together) any, -
(a) Land; or
(b) Building (including factory building); or
(c.) land appurtenant to a building (including factory building); or
(d) Machinery; or
(e) Plant; or
(f) Equipment; or
(g) Furniture; or
Whether or not any or all of the above are owned by the payee.
A Lease, defined under Section 105 of The Transfer of Property Act, 1882, is a transfer of the right to enjoy the concerned property for a pre-defined time period or in perpetuity. The lessor (owner of the property) gives the lessee (the one leasing the property) such consideration periodically, usually at the beginning or end of a lease agreement.
License is defined in Section 52 of the Indian Easements Act,1882. License does not allow any interest in the premises on the licensee's part. It merely gives the licensee the right to use and occupy the premises for a limited duration.
A lease deed needs to be stamped and registered. The amount payable towards the lease deed's stamp duty is more than that payable towards the Leave and License's. For a period exceeding three years, the stamp duty is same for both agreements.
The rates of TDS in case of rent shall be as under:
Nature of payment – Rent (194I)
(a) Rent of Plant Machinery or equipment 2%
(b) Rent of Land, Building or furniture to an individual and Hindu undivided family. 10%
(c) Rent of land, Building or furniture to a person other than an individual or Hindu Undivided Family. 10%
There are a number of factors that determine the optimum rent that you can charge, which are largely driven by the local market conditions such as supply & demand, and competition. However, there are many other factors that can influence the amount of rent that your home will yield including the interior and exterior condition, upgrades, amenities, location in the community, and even its curb appeal.
A: Some of the factors a lessee or occupant must keep in mind while rent a flat or office is:
•Locality i.e. transport, schools, hospitals, market, business district, entertainment centres, hotels, restaurants,
•Quoted area of the flat i.e. Carpet, Built Up Area and super Built Up Area
•Car parking space
•State of the premises, quality of construction, fixtures and fittings in the premises
•Reputation of the Lessor
•Sufficient water and electric supply, other utilities
•Cost components: rent, stamp duty, registration charges, transfer fees, monthly outgoings and society charges, costs
•Any other distinguishing features or advantages of the property.
•Market Trends about prevalent rates of property in the vicinity and last known transactions
•Identify the property you wish to rent
•Formulate commercial terms
•Distinguish between terms and conditions of the contract which are negotiable and those, which are fixed eg. Rent,
payment schedule, time of completion etc.
•Compile or Ask for photocopies of the all deeds of title related to the property to be purchased. Examine the deeds
to establish the ownership of the property by the Lessor, preferably through an advocate. Ascertain the survey
number, village and registration district of the property as these details are required for registration of the sale.
Previous encumbrances and loans, if any on the property must be cleared before renting of the property. The title
of the lessor must be clear and marketable.
•Finalize commercial terms. Ascertain stamp duty, registration charges and outgoings to be paid i.e. property tax,
water and electricity charges, society charges, maintenance charges.
•Request Lessor to obtain, if applicable, consent, permission, sanction, no objection certificate of various authorities
such as the (a) society (b)) any other authority.
•Permanent Account Number of Vendor and Purchaser under Income Tax laws.
•Payment of stamp duty on the formal agreement or document for transfer of the property, signing by both the
vendor and purchaser and the registration.
If rent is not received by the 5th of the month the tenant should be contacted to remind them that rent has not been received. If on the 7th rent has still not been received then send another reminder. If still have not received the rent by the 10th of the month, then serve the tenant with a 7-day notice to pay or quit, which starts the clock for a possible eviction. If rents have not been received by the 20th, then work out options with tenant, including eviction
You can advertise your home in several ways. utilize online resources such as real estate websites, Facebook,Newspaper Adds. Etc
Documents generally prevalent for renting residential premises can be a lease, leave and licence agreement, paying guest or caretaker agreement.
You should learn as much as you can about the condition of the premises before you hire it. You need to investigate the condition of the property and all its systems such as :-
•plumbing systems, drainage, water faucets and sanitary fittings.
•electrical systems, circuit breakers, wires, capacity of the electric meter, functioning of light fittings
•roof, walls, ceilings, floors, paintwork.
•foundation, basement and visible structures.
•doors and windows, latches, locks.
•structural stability of the building.
•fixtures and fittings
These circumstances could be summarized as under:-
(a)on the expiry of the period of lease;
(b)on the happening of the event, which is a condition for expiry;
(c)on the happening of such event when the lessor's interest in the property terminates;
(d)when the persons holding the ownership and the lease become one and the same person at the same time and in the right; this state is also known as `merger’;
(e)when the lessee expressly yields up its interest to the lessor;
(f)implied surrender i.e. by the creation of new relationship e.g. where the lessee becomes the mortgagee, the latter’s
rights remain in abeyance because the larger rights as the mortgages come into effect. The rights as the lessee are
restored when the mortgagee is redeemed.
(g)Lessee breaking the express condition giving the lessor a right to re-enter, lessee setting up an adverse title i.e. a
title in himself or in a third party or upon the lessee being adjudged insolvent whereupon lease stipulates for a
right of re-entry upon the lessor & which is followed by the lessor giving to the lessee notice to determine. This is
technically known as forfeiture;
(h)On the expiry of the notice to determine the lease or to quit or of information to quit duly given by either party to
to the other.
Documents generally prevalent for renting offices or shops can be a lease, leave and licence agreement, business centre agreement or conducting rights agreement.
Any person, other than an individual or a HUF, is responsible for paying to resident in India, any income by way of the rent, amounting in aggregate to more than Rs. 180000 in a financial year. However w.e.f. 01/06/2002, individuals and HUF who were covered under section 44AB (a) and (b) in the preceding previous year, are also required to deduct tax at source.
There is no prescribed norm for determining the market rent rate though it can be easily found out by approaching individuals such as brokers, registration authority, etc.