Rent Agreement – Documents , Stamp Duty , e-Stamping
Since homeownership may sometimes be inconvenient or unaffordable, a majority of the migrant working population in India’s in metro cities live in rented houses. For this, the tenant signs a rent agreement with the owner, which includes the terms and conditions that shall be binding on both parties.
Documents Required for Rent Agreement
Table of Contents
Stamp Duty on Rental Agreement
You have to pay a stamp duty while registering the rent agreement, which will vary, depending on the city where it is registered. This amount is paid, by purchasing the stamp paper of value you owe to the government. In Maharashtra, leave and license agreements are required to be stamped, with a flat stamp duty rate of 0.25 percent of the total rent for the period.
Draft Model Tenancy Act
To promote rental housing in India, the government has formulated a draft policy, the Draft Model Tenancy Act, 2020, to make the transaction beneficial for both, landlords and tenants. The provisions laid under this model policy, are intended to serve as guiding principles while drafting a rent agreement. According to the union housing secretary, the policy, which is likely to replace the existing laws on rental housing across India soon, will unlock over one crore units in India’s rental housing markets.
Penalty On Delay in Rent
The draft law also states that tenants extending their stay in rented accommodation as mentioned in the agreement ,will be liable to pay double the rent amount for the first two months and four times the rent in the subsequent months.
Under the provisions of the Draft Model Tenancy Act, 2019, landlords cannot implement any hike in the pre-fixed rent for the entire period for which a rent agreement has been signed. If the rent agreement expires after 11 months, for example, the landlord cannot hike the monthly rent during this period. It is only after this period and at the time of the registration of the new rent agreement that the landlord is legally empowered to effect a hike in rate, typically not exceeding 10% of the existing amount. Also, the landlord will have to give three months’ notice to the tenant, before increasing the rent according to the draft act.
What is the e-stamping of the Rent Agreement?
In some states, where the e-stamping facility for rental agreements is available, you do not have to physically buy the stamp paper. You can log on to the Stock Holding Corporation of India Ltd (SHCIL) website and check, if the state where you reside offers this facility. Presently, Assam, Gujarat, Himachal Pradesh, Karnataka, Maharashtra, Delhi-NCR, Tamil Nadu, Uttarakhand and Uttar Pradesh, allow e-stamping of rent agreements.
Frequently Asked Questions About Rental Agreements
QUE – WHY RENTAL AGREEMENT IS MADE FOR 11 MONTHS?
Ans – Rental Agreement for 11 months is made to avoid the Strict Rental Law which applies for the Lease up to 12 months, that is why also the One Month in the count of 12 months is considered as the month of Notice Period Serving by the Owner.
QUE – HOW TO PRINT RENT AGREEMENT ON E-STAMP PAPER?
Ans – Start printing the Rent Agreement below the line on the e-stamp paper and mention Continued to page 2 and attach other pages of Rent Agreement giving the Page Numbers. While giving the Page Number consider the Stamp Paper Page as Page Number 1 and mark other numbers of the page accordingly.
QUE – IS IT MANDATORY TO INCLUDE THE DETAILS OF ALL THE TENANTS WHILE DRAFTING THE RENT AGREEMENT?
Ans – Yes, it’s highly recommendable to include the Details of all the Mature Tenants. If you will not include the details of all the Tenants then the terms and conditions mentioned in the Agreement will not be applicable to all the Tenants which can cause problems in the future.
QUE – WHICH ONE IS MORE SECURE, NOTARIZED RENT AGREEMENT OR REGISTERED RENT AGREEMENT?
Ans – Registered Rent Agreement is more secure, however, the case depends on these two points-
- If the Agreement is making for 11 months then notarizing it with Notary Public is sufficient and Valid.
- If the Agreement is making for above 11 months then it is recommended to make it register as the validity for Notary Attestation is for 1 year in case of Rent Agreement.
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QUE – WHAT CONSEQUENCES CAN BE FACED IF WE WILL NOT MAKE OUR RENT AGREEMENT REGISTERED?
Ans – If the Concerned Rent Agreement is for more than 11 months then the unregistered rent agreement cannot be used as evidence in Court. It cannot be used as proof or claim of any terms and conditions provided. So, it is always recommended to make the Rent Agreement registered to be on the safer side to avoid any kind of loss.
QUE – WHICH ONE INCLUDE LESS COST – NOTARIZED RENT AGREEMENT OR REGISTERED?
Ans – Notarized Rent Agreement include less cost. You can get a Notarized Rent Agreement within Rs. 200 – Rs. 400/-, about Registered Agreement it cost more as compare to the Notarized Rent Agreement as, as per the Rent the Stamp Duty needs to be pay. It can cost around – Rs. 3,000 to Rs. 6,000/- or it depends upon the Rent of the Property.
QUE – WHAT ARE THE DIFFERENT CHARGES INCLUDED TO REGISTER THE RENT AGREEMENT?
Ans – If the Lease is up to 5 years then the Stamp Duty cost is 2% of the total annual rent and if there is also security deposited then additional Rs. 100/-.
- If the Lease is from 5-9 years then the Stamp Duty cost is 3% of the total annual rent and if there is also security deposited then additional Rs. 100/-.
- If the Lease is of above 9 years then the Stamp Duty cost is double of 3% i.e 6% of the total annual rent and if there is also security deposited then additional Rs. 100/-.
Minimum Registration Fees of Sub-Registrar is Rs. 1,100/- (Rs. 1,000/- and additional pasting fees of Rs. 100/- )also needs to be paid.
QUE – WHAT ARE THE DOCUMENTS REQUIRED FOR REGISTRATION?
Ans – Documents required for the registration process are:-
- One Original Identity Proof of Owner and Tenant.
- Two Passport Size Photographs of each-Owner and Tenant.
- Two Witnesses with their Original Identity Proof.
QUE – HOW MUCH TIME REGISTRATION PROCESS TAKE?
Ans – It depends upon the Appointment as well as on the Status of the Application. Usually, the Registration process takes 2-4 Working Days.
Que: What Should Be Included In The Rental Agreement?
Ans – The rent agreement should include the names and address of the landlord and tenant, terms of the tenancy, period of tenancy, rent, and security deposit amount, restrictions on both parties, conditions for termination of the agreement, conditions for renewal, and details of who should bear other charges such as maintenance charges, repairs, etc.