Quick summary: Use a leave and licence agreement (not a lease) for residential rentals. Register it if the term is over 11 months. Include the security deposit, notice period, maintenance responsibilities, and lock-in clause explicitly in writing.
Lease vs leave and licence: which should you use?
Most people use the terms interchangeably, but there is an important legal distinction:
| Lease | Leave and Licence | |
|---|---|---|
| Creates | An interest in the property (tenant has rights) | A personal permission to occupy (easier to terminate) |
| Eviction | Long court process under Rent Control Acts | Faster; no rent control protection after term |
| Preferred by | Tenants (more protection) | Landlords (easier termination) |
| Standard in India | Rarely used for residential | Standard for residential rentals |
For residential rentals in India, a leave and licence agreement is the standard and is recommended for both parties. It provides clear terms and avoids the complications of rent control legislation.
11-month agreements: why so common?
You will notice most rental agreements in India are for 11 months, not 12. This is deliberate: agreements of 12 months or more must be compulsorily registered under the Registration Act, 1908 (Section 17). Registration involves paying stamp duty and registration charges.
An 11-month agreement on stamp paper is not required to be registered, saving both parties time and cost. It is still a valid and enforceable contract. After 11 months, the agreement is renewed (usually with the same or slightly revised terms).
Key clauses every rental agreement must have
- Names and addresses of landlord and tenant, with ID proof details
- Property description — exact address, flat/unit number, BHK, parking
- Monthly rent — amount, due date, grace period, late payment penalty
- Security deposit — amount, conditions for deduction, timeline for return
- Tenure and renewal — start date, end date, renewal process, annual escalation %
- Notice period — how much notice each party must give to vacate or terminate
- Lock-in period — minimum stay required before vacating (typically 6–11 months)
- Maintenance charges — who pays society maintenance, minor repairs vs major repairs
- Permitted use — residential only; subletting restrictions
- Utilities — who pays electricity, water, internet, and how meters are read
- Property condition — list of existing damages to avoid disputes at exit
- Landlord's access rights — how much notice before inspection visits
How to register a rental agreement
For agreements of 12 months or more, or if you want the stronger legal protection of registration for any term:
- Draft the agreement with all relevant clauses (have a lawyer review it).
- Calculate stamp duty: stamp duty on rental agreements varies significantly by state and is typically based on annual rent, not total rent for the period. In Karnataka it is a modest flat amount (a few hundred rupees for standard agreements under Article 30A of the Karnataka Stamp Act). In Maharashtra it is 0.25% of (annual rent × number of years + deposit). Verify the applicable rate with your state's stamps department or a local lawyer.
- Pay stamp duty via e-stamping or stamp paper.
- Both landlord and tenant (with two witnesses) visit the Sub-Registrar's office with originals + photocopies of ID and the agreement.
- Pay registration fee: varies by state (e.g., ₹1,100 in Maharashtra; ₹200 in UP; state-specific in Karnataka). Confirm the fee with your local Sub-Registrar's office.
- The registered document is returned within a few working days.
Several states (Maharashtra, Andhra Pradesh, and others) offer online registration portals for rental agreements. Availability and functionality of these portals changes over time — check your state's Stamps & Registration department website for the current process.
Security deposit: what is fair?
Security deposit norms vary dramatically by city:
| City | Typical Security Deposit |
|---|---|
| Bengaluru | 8–12 months' rent |
| Mumbai | 2–3 months' rent |
| Delhi NCR | 2–3 months' rent |
| Hyderabad | 5–10 months' rent |
| Pune | 3–5 months' rent |
| Thrissur / Kerala | 3–6 months' rent |
| Chennai | 3–6 months' rent |
Bengaluru's high deposits are a known pain point. Always document the exact deposit amount in the agreement and get an acknowledgement receipt.
Tenant rights you should know
- Right to a receipt for every payment made (rent + deposit)
- Right to peacefully enjoy the property without interference
- Right to the return of security deposit minus only agreed deductions
- Right to adequate notice before eviction
- Right to have essential repairs (electrical, plumbing, structure) done by the landlord
Always document move-in condition: Take timestamped photos of every room, all fixtures, appliances, and existing damages before you move in. Share them with the landlord via WhatsApp or email for a paper trail. This simple step prevents the majority of deposit disputes at move-out.
Things often missed
- Police / tenant verification: Most Indian cities require police verification of tenants. Several states (including Karnataka and Maharashtra) make it mandatory for landlords to register tenants with the local police station. As a landlord, non-compliance can attract legal liability. Check requirements with your local police station.
- TDS on rent above ₹50,000/month (tenants): Under Section 194-IB of the Income Tax Act, an individual or HUF tenant paying rent exceeding ₹50,000 per month must deduct 2% TDS (5% for failure to provide PAN) and deposit it with the government using Form 26QC annually. This is a tenant obligation, not the landlord's — non-compliance attracts penalties and interest. Consult a CA if your monthly rent exceeds this threshold.
- Model Tenancy Act, 2021: The central government enacted the Model Tenancy Act, 2021, which proposes standard tenancy rules including a 2-month security deposit cap for residential properties and a written tenancy agreement for all rentals. Several states are in the process of adopting it (Andhra Pradesh has notified it; UP has adopted it). Check whether your state has enacted it, as it may override older rent control legislation.