The Two Types of Rental Agreements in India
Indian owners use either a leave-and-licence agreement (short-term, 11 months, usually renewable) or a lease deed (longer, registered, creates tenancy rights). The leave-and-licence is by far the dominant instrument — it avoids the Rent Control Acts that heavily protect tenants, is cheaper to execute, and allows flexible termination. A lease for 12 months or more legally must be registered under Section 17 of the Registration Act, and converts the occupier into a 'tenant' under state Rent Control law.
Why 11 Months is the Industry Standard
Section 17 of the Registration Act 1908 makes registration compulsory only for leases of 12 months or longer. An 11-month agreement bypasses registration, costs only ₹100 to ₹500 in stamp paper, and is fully enforceable in court. It can be renewed indefinitely without ever triggering long-term tenancy rights. For 98 percent of residential rentals in India, this is the right choice.
When You MUST Register the Agreement
Four scenarios require registration regardless of duration.
- →Any agreement of 12 months or longer — under the Registration Act 1908
- →All leave-and-licence agreements in Maharashtra — state-specific mandate
- →Commercial rental agreements above certain thresholds in Delhi and Karnataka
- →Any agreement where either party demands registered status for enforceability
State-Wise Stamp Duty for Rental Agreements
Stamp duty rates vary substantially. Rates below are for residential rental agreements as of early 2026 — confirm with the state's IGR department before executing large agreements.
- →Maharashtra (leave-and-licence): 0.25 percent of total rent + 10 percent of deposit
- →Delhi: 2 percent of average annual rent (subject to ceiling)
- →Karnataka: 0.5 percent of total rent + deposit for the term
- →Tamil Nadu: 1 percent of total rent + deposit, capped
- →Uttar Pradesh: ₹100 stamp paper for 11-month agreements (unregistered)
- →West Bengal: 0.1 percent of total rent for short-term, higher for registered leases
- →Gujarat: 0.5 percent of total rent; registration 1 percent
- →Telangana and Andhra Pradesh: 0.5 percent for leases up to 10 years
- →Rajasthan: ₹200 stamp paper for 11-month agreements
- →Haryana (Gurugram, Faridabad): 1.5 percent of average annual rent
The Model Tenancy Act 2021: Where It Stands in 2026
The Central Model Tenancy Act 2021 is a template law meant to modernise and standardise rental law across India. As of 2026, it has been adopted by only four states: Uttar Pradesh, Andhra Pradesh, Tamil Nadu, and Assam. Adopted states set up Rent Authorities for faster dispute resolution, cap deposits at two months' rent for residential and six months for commercial, and mandate written registered agreements for all rentals. In non-adopted states (Maharashtra, Delhi, Karnataka, etc.), the old state-specific Rent Control Acts continue to govern.
Mandatory Clauses Every Agreement Must Have
Courts have repeatedly voided rental agreements missing these provisions. Include all of them.
- →Full names, addresses, PAN/Aadhaar of both parties
- →Exact address and description of the premises (photos of the property attached as annexure is best practice)
- →Licence period — start date and end date
- →Monthly rent amount and payment due date (usually the 1st to 5th)
- →Security deposit — amount, refund condition, refund timeline
- →Permitted use — residential, number of occupants, business use or not
- →Maintenance split — society charges, repairs, utilities
- →Termination clause — notice period (typically 60 days tenant, 30 days owner)
- →Escalation clause — annual rent increase percentage
- →Dispute resolution — arbitration or jurisdictional court
- →Signatures on every page + two witness signatures
Clauses That Protect Owners (Often Missed)
Most off-the-shelf templates favour tenants. Add these owner-protective clauses.
- →Right to inspect with 24-hour notice, at least once a quarter
- →Damage clause with interior paint cost if stay exceeds 24 months
- →No subletting without written owner consent
- →No structural alteration without written owner consent
- →Default clause — interest at 1.5 percent per month on rent delays over 7 days
- →Return-to-original-condition clause — specific measurable standards
- →Utility bill clearance at handover as a deposit refund condition
The Difference Between Lease, Licence, and Tenancy
A lease transfers possession and creates tenancy rights — the tenant has statutory protection and eviction is slow. A licence grants permission to use without possession transfer — easier to terminate. A leave-and-licence is the hybrid instrument Indian law uses most often: it says 'I permit you to use my property' rather than 'I transfer possession to you.' The language matters. Using 'tenant' and 'lease' in an 11-month agreement can, in some courts, be interpreted as creating tenancy — use 'licensee' and 'licensor' to be safe.
Rent Control Acts: The Hidden Risk
Most Indian states have a pre-independence era Rent Control Act — highly tenant-protective, slow to evict, rent-capped. These Acts apply automatically to properties above a minimum age (usually 25 years) in certain localities. If your property falls under Rent Control, a tenant can stay for decades at a rent you cannot meaningfully raise. Avoidance: use leave-and-licence (not lease), keep durations under 12 months, register in Maharashtra, and consult a local lawyer if your property is 20-plus years old in a notified area.
Digital Agreements and e-Stamping
As of 2026, digital rental agreements with Aadhaar e-sign are legally valid in all states under the Information Technology Act 2000. Platforms like SHCIL and state IGR portals allow full online stamping, signing, and notarisation — no physical paper required. For 11-month agreements, e-stamping takes under 30 minutes and costs the same as physical stamp paper. For registered agreements in Maharashtra, the IGR online portal handles the full flow. Printed + signed physical copies are still accepted by all courts, so choose what suits both parties.