Who pays for registration of rent agreement?

If you are a home seeker looking for a house on rent or a landlord looking to rent out your property, it is necessary to understand the importance of the rent agreement. Basically, a rent agreement is a legal contract signed between a landlord (also known as the lessor) and a tenant (known as the lessee), which mentions the terms and conditions of the tenancy.

Rental agreements in India of more than one year must be registered. In India, the Rent Control Act was introduced to govern the renting of properties and to protect the tenants or property owners against exploitation of each other’s rights. The responsibility for registering the rental agreement may fall upon either of the parties, varying from state to state. According to the Delhi Rent Control Act, 1995, which lays down the landlord-tenant laws in Delhi, having a written rental agreement and registration of this document is mandatory.

 

Who should register the rent agreement?

According to the Delhi Rent Control Act and the Transfer of Property Act, it is the landlord’s responsibility to register the rent agreement. In case the landlord fails to do so, they may have to pay a penalty of Rs 5,000 and/or face imprisonment for up to three months.

 

Why should the owner register the rent agreement?

A registered rent agreement has legal validity and can be produced in a court of law. Thus, property owners renting out the property should register the rent agreement so that they can use it as evidence in their defence in case the tenant defaults on the rent payment.

See also: Rent agreement in Delhi

 

Should tenants register the agreement?

The objective of the Delhi Rent Control Act is to protect the rights of tenants against unfair eviction. Without a written rent agreement, these provisions are of no use. There are clauses that protect a tenant from unfair rent increases. As per the provisions, rent can only be increased after one year as per the agreement and not according to the market rate or as per the landlord’s whims. Moreover, entering into an agreement without registration is illegal and could pose a risk for both parties, especially in case of a dispute.

 

Who should bear the cost of registering a rent agreement?

In India, the cost of drafting the rent agreement and stamp duty is borne by the tenant in most cases. The tenant may also be responsible for registering the rent agreement as per local laws. However, the rent agreement cost can be borne by the landlord or shared between both parties.

 

What is the cost of registration of rent agreement?

Rental period	Stamp Duty (% of Consideration Value)	Registration charges
Less than 5 years	2%	Rs 1,100
5-10 years	5%	Rs 1,100
10-20 years	5% of the double consideration value	Rs 1,100

The consideration value is the average annual rent payable, as specified in the agreement.

 

Consequences of not paying the stamp duty

If a rent agreement on a stamp paper is not registered, it will not be admissible as evidence in a court of law. Normally, people use stamp paper of minimum values of Rs 100, Rs 50 or Rs 20 to save the cost of paying actual stamp duty levied by the government. However, this will not work in case of litigation. The court may levy a fine of up to 10 times the original stamp duty.

 

FAQs

How rent agreement is renewed?

Extending the rental agreement requires some simple changes, including the terms and conditions, execution date, details of landlord and tenant such as age, maintenance cost, etc. Add the word renewal or extension in the title of the agreement. The execution procedure of the renewal agreement will be the same as for the first agreement. Print the draft on e-stamp paper and get the document signed by the landlord, tenant and witnesses. Visit the nearest sub-registrar office to renew the agreement.

What is the time period for rental agreement renewal?

The agreement can be extended at the end of the term.

Do we need to renew rental agreement every year?

Rental agreements for residential properties have to be renewed every 11 months.

How long is the rental agreement valid?

Rental agreements for residential properties are for 11 months. For other properties, it may be 2 years, 5 years or even more. The term is mutually decided between the tenant and the landlord.

Who pays for the rental agreement, owner or tenant?

Usually, the tenant pays for the rental agreement, including the cost of drafting the agreement, stamp duty and registration.

Can rent agreements be registered online in Delhi?

In Delhi, one has to visit the nearest sub-registrar office (SRO) under whose jurisdiction the property falls to register the rental agreement.

Is rent agreement registration mandatory in Delhi?

If the rental period is less than 12 months, registration of rent agreement is not mandatory in Delhi.

Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at jhumur.ghosh1@housing.com