A rent agreement is a crucial document in the rental process, establishing the terms and conditions between landlords and tenants. In Delhi, where rental transactions are common, having a clear and comprehensive rent agreement is essential for safeguarding both parties’ interests. This article explores the key elements to consider when drafting or signing a rent agreement in Delhi. From legal requirements and essential clauses to tenant and landlord responsibilities, understanding these aspects will help ensure a smooth and dispute-free rental experience.
Is rent agreement in Delhi a must?
Rent agreements legally bind the landlord and the tenant to abide by the conditions mentioned in the contract. The general practice in Delhi is to make a rent agreement for up to 11 months. The Registration Act, 1908, mandates registration of a lease agreement, if the occupancy tenure mentioned in the agreement is more than 12 months. So, to avoid stamp duty and registration fees, people prefer to enter into a leave and license agreement (rent agreement) for 11 months. On the expiry of the 11 months’ period, if the parties agree, they draw a new agreement for the next 11 months.
Types of rent agreement in Delhi
Here are some of the most common types of rent agreement in Delhi.
11-month rent agreement
In Delhi, rental agreements are typically drafted for a duration of 11 months, with an option to renew at the end of the term. Tenants are required to pay monthly rent along with utility bills such as electricity and water. Additionally, they are responsible for maintenance charges, which cover the upkeep of shared amenities and the overall premises.
Long-term lease agreement
A long-term lease is another common arrangement where a tenant pays a lump sum amount upfront for a specified number of years. Unlike the monthly rental model, no monthly rent is charged. At the end of the lease period, the landlord returns the initial deposit to the tenant without any interest. However, the tenant must continue to pay utility bills and maintenance charges throughout the lease duration.
Commercial rental lease agreement
Rental agreements for commercial properties follow a similar registration process as residential leases, including applicable stamp duty. The procedures for drafting and registering a commercial lease are comparable to those for residential rental agreements.
How to create a rent agreement in Delhi?
Here are the steps to create a rent agreement in Delhi:
- The first step towards preparing a rent agreement in Delhi is to reach mutual consent. The landlord and the tenant must give their consent to the terms and conditions for the rent. This should include points such as security deposit, rent amount, maintenance charges, notice period, rent tenure, etc.
- The next step towards preparing a rent agreement in Delhi is to print the terms that have been mutually agreed upon, on a stamp paper of due value. Once the agreement is printed, it is advisable for both parties to read all the points once again, to avoid any discrepancy.
- If all the points are correct, both parties should sign the agreement in the presence of at least two witnesses. The next step is to get the deed registered at the local sub-registrar’s office.
e-Stamping for rent agreements in Delhi
In Delhi, the traditional use of stamp paper has been replaced by e-stamping. To create a rent agreement, individuals must obtain an e-stamp corresponding to the total Stamp Duty value, then print the agreement on this e-stamp. E-stamps are managed by the Stock Holding Corporation of India Limited (SHCIL) and can be acquired from registered stamp vendors, online for home delivery, or through designated banks and SHCIL branch offices. For Stamp Duty payments up to Rs 500, e-stamping can be completed online without requiring physical stamp paper. For more information on procurement centres and online payment procedures, visit the SHCIL website.
Is it mandatory to register a rent agreement in Delhi?
The Delhi Rent Control Act, 1995, mandates a written rent agreement and its registration. If the document is not registered, the consequence under the Registration Act, 1908, becomes applicable.
Registration of rent agreements is not mandatory in Delhi if the rental period is less than 12 months. However, it is still advisable to get it registered, to create a legally enforceable right. Only a registered rent agreement can be produced as legal evidence by the parties to it, for resolving any legal dispute amicably. Since oral agreements cannot be registered, they have no legal sanction.
How to register a rent agreement in Delhi?
It is the landlord’s responsibility to get the rent agreement registered under the Registration Act. To register the rent agreement, you can visit the nearest sub-registrar’s office. Registration of the rent agreement can be done within four months of the creation of the deed. At the time of the registration, both parties must remain present, along with two witnesses. In the absence of either or both parties, the registration can be executed by the power of attorney-holders, who hold the rights to finalise the agreement.
Rent agreement registration fee in Delhi
The fee for rent agreement registration in Delhi includes stamp duty, registration fee, the legal advisory fee, etc. In Delhi, you have to get the e-stamped agreement paper and print the rental conditions on it. The stamp duty applicable on the rent agreement is as mentioned below:
- For 11 months: 2% of 12-month average rent
- For less than a five-year rental period: 2% of 12-month average rent
- For five to less than 10-year rental period: 3% of 12-month average rent
- For 10 to 20-year rental period: 6% of 12-month average rent
Apart from stamp duty, Rs 1,100 is payable towards registration charges.
If you hire a legal expert to draft a rent agreement and get the agreement registered, it may cost you extra.
Consequences of not registering a rent agreement in Delhi
Not registering your rent agreement and using stamp paper with lower values, such as Rs 20, Rs 50, or Rs 100, to save on stamp duty may seem like a cost-effective solution. However, this approach can lead to significant legal consequences if the agreement ends up in court. The court may impound the document for the shortfall in stamp duty and could impose a penalty of up to ten times the original amount due. Therefore, it is advisable to pay the full stamp duty as prescribed by law when drafting an agreement.
Additionally, registering your rent agreement in Delhi is crucial to safeguard against potential disputes, such as a tenant failing to pay rent or refusing to vacate the property. Ensure that both stamp duty and registration fees are settled before presenting the agreement in court to avoid any future complications.
Documents needed for registration of rent agreement in Delhi
Following are the documents needed for the registration of a rent agreement in Delhi:
- Original/copy of title deed as proof of ownership.
- Tax receipt or Index II.
- Address proof of both the parties. It can be a photocopy of one’s passport, Aadhaar card, driving licence, etc. Carry the original ID cards with you for verification.
- Two passport-sized photos of the landlord and the tenant.
- Identity proof such as a copy of a PAN card or Aadhaar card.
- Rent agreement printed on stamp paper.
Online registration of rent agreement in Delhi
Online registration is now fully operational in Delhi. The online rent agreement process is highly reliable, transparent and cost effective. It can save time and money. There are some well established companies, which offer hassle-free online rent agreement services to their customers. You can use their platforms, from finding a home on rent to getting the rent agreement registered.
Know about: Rent agreement online
Rent agreement renewal in Delhi
In Delhi, most rent agreements are executed for 11 months to avoid complications under the Delhi Rent Control Act. Once this period ends, the agreement must either be renewed or a new one drafted to ensure the tenancy remains legally valid.
- Fresh Agreement vs. Renewal: In most cases, landlords and tenants prefer creating a new agreement with updated terms rather than extending the old one.
- Revision of Rent: Landlords may seek an increase in rent during renewal, often in the range of 5–10% annually, though this should be mutually agreed upon.
- Updated Terms: Other conditions such as security deposit, maintenance charges, and notice period can also be revised before signing the renewed agreement.
- Stamp Duty & Registration: A renewed agreement must be executed on fresh stamp paper and, if the term exceeds 11 months, registered with the Sub-Registrar Office to be enforceable.
- Police Verification: Renewal also requires fresh tenant details to be submitted to the local police station, as per Delhi Police rules.
Renewing the rent agreement on time helps avoid legal disputes, ensures transparency, and safeguards the rights of both landlord and tenant.
Difference between notarised and registered rent agreements in Delhi
In Delhi, rent agreements can be either notarised or registered, but it’s important to understand the distinction between the two. A notarised rent agreement is simply attested by a notary public, serving as a record that both parties have signed the agreement willingly. It offers some evidentiary value but does not carry the same legal weight as a registered document.
A registered rent agreement, on the other hand, is officially recorded with the local sub-registrar under the Registration Act, 1908. This type of agreement is legally binding and admissible as evidence in court. For leases of 12 months or more, registration is mandatory. While many landlords and tenants in Delhi opt for an 11-month notarised agreement to avoid stamp duty and registration charges, a registered rent agreement provides greater legal protection and enforceability in case of disputes.
What should a rent agreement in Delhi include?
A well-crafted rental agreement is essential to prevent disputes and clarify expectations between landlords and tenants. Here are the key elements that should be included:
- Ownership and documentation: Ensure that the ownership of the property is clearly documented, and attach a copy of this documentation during the registration of the rental agreement.
- Contract duration: Specify the rental period in the agreement. If the lease is for less than a year, a notarised agreement may suffice. For leases longer than a year, registration of the rental agreement is required.
- Terms and conditions: Outline the terms and conditions agreed upon by both parties. These details are crucial as they will guide any legal proceedings in case of disputes.
- Facilities and maintenance: List all facilities, utilities, and appliances provided by the landlord. Include a clause detailing responsibilities for repair and maintenance. For instance, if a geyser needs repair, clarify how such issues should be addressed and who bears the cost.
- Rent and security deposit: Clearly state the total rent amount and the security deposit. The agreement should also cover conditions under which the landlord can terminate the contract and retain the security deposit.
- Tenant restrictions: Detail any restrictions imposed by the landlord. This may include limitations on guest types or food preferences, especially if the tenant is a bachelor.
- Purpose of rental: Specify the intended use of the property. If rented as a commercial space, the tenant cannot repurpose it or sublet without written consent from the landlord.
Points to keep in mind when making a rent agreement in Delhi
Rent agreements are crucial documents for the landlord and the renter. Here are some important points to keep in mind, when making a rent agreement:
- The landlord is allowed to include a clause in the agreement that stipulates an increase in rent by up to 10% every three years and also in conformation to the Delhi Rent Control Act.
- The tenant is entitled to receive a rent receipt for the payment of rent.
- The notice period by both, the landlord and the renter, should be mentioned in the agreement.
- The details of the rent agreement should be mentioned clearly.
- Details pertaining to fittings and fixtures should be mentioned in the rent agreement.
- While creating a rent agreement in Delhi you should clearly cover critical points such as provision for parking, provisions related to pets, permission for structural changes, etc.
Housing.com POV
Creating a comprehensive and legally sound rent agreement in Delhi is essential for both landlords and tenants. By understanding the necessary steps and including all critical clauses in the agreement, both parties can ensure a smooth rental experience and protect their interests. Whether drafting or signing a rent agreement, it’s important to follow legal requirements, such as obtaining an e-stamp, registering the agreement if needed, and paying the applicable fees to avoid future disputes and legal complications. Ensuring that the agreement covers ownership details, rent conditions, maintenance responsibilities, and tenant restrictions will help prevent misunderstandings and create a fair and transparent rental arrangement. With proper attention to these elements, you can foster a positive and hassle-free rental experience in Delhi.
FAQs
Who pays for the rent agreement?
The rent agreement cost can be borne by the landlord, or the tenant or shared between both.
Who keeps the original rent agreement?
The landlord has to keep the original rent agreement document.
How much does a rent agreement cost in Delhi?
The cost of a rent agreement in Delhi includes the stamp duty, which is 2% of the 12-month average rent for an 11-month lease, plus a registration fee of Rs 1,100, and possibly legal fees.
Is rent agreement mandatory in Delhi?
Yes, a rent agreement is mandatory in Delhi as it legally binds both parties to the terms. While registration is not required for agreements less than 12 months, it's recommended for legal enforceability.
What is the stamp duty for 11-month rent agreement in Delhi?
For an 11-month rent agreement in Delhi, the stamp duty is 2% of the 12-month average rent, in addition to a registration fee of Rs 1,100.
What is the lock-in period in a rent agreement?
The lock-in period in a rent agreement is the minimum duration during which the tenant cannot terminate the lease. It is specified in the agreement and varies based on mutual consent.