You must have often seen that the rent agreement between the landlord and the tenant is always for 11 months, but have you ever wondered why? An 11-month rent agreement is beneficial for both the landlord and the tenant. It has fewer legal hassles and is also cheaper. Sudhanshu Mishra, Principal Partner, Square Yards, has given detailed information on this subject. In this article, we will know what a rent agreement is, why an 11-month agreement is chosen, and what the special things are in it for both the tenant and the landlord.
Why is the rent agreement only for 11 months
The rent agreement is a legal document that gives protection to both the landlord and the tenant. It contains all the conditions related to renting a house.
What is a rent agreement
It is a legal document that contains all the important details like rent, facilities provided, duration of the agreement, security deposit, maintenance responsibilities, and rules for terminating the agreement. It protects both parties and serves as evidence in court in case of any dispute. This maintains transparency, and there is no confusion about the use of the house.
Why only an 11-month agreement
The rent agreement can be for more than 11 months, but the 11-month agreement is the most popular. The main reason for this is that it is not mandatory to register it. In an agreement of 12 months or more, registration and more stamp duty have to be paid, which is expensive and hassle-filled. The 11-month agreement is cheap and easy for both the tenant and the landlord. There are fewer legal hurdles in increasing the rent or terminating the agreement.
Can an agreement be for more than 11 months
Yes, it is possible. The agreement can be for one year, two years, or even more. But such agreements need to be registered in the sub-registrar’s office. Along with this, more stamp duty also has to be paid. A long agreement gives stability to the tenant and ensures a fixed income to the landlord, but it increases legal formalities. It depends on the consent and the needs of both parties.
What are the legal rules of a rent agreement
The rent agreement should be in writing, dated, and signed by both parties. If the agreement is for more than 11 months, then it is necessary to register it. It should clearly state the terms of rent, security deposit, maintenance, and rent increase. It is made under the Indian Contract Act, the Transfer of Property Act, and state rent control laws. If a long agreement is not registered, legal problems may arise.
How much is saved by not registering
By making a rent agreement for 11 months, the cost of stamp duty and registration is saved. The stamp duty is very low in this, whereas in an agreement of more than 12 months, one percent of the total rent amount is charged as stamp duty and registration fee separately. This cost can be quite high.
How much the rent can increase after 11 months
How much the rent will increase depends on the state’s rent control laws and the terms of the agreement. Usually, there is a rule of 8-10% increase so that the tenant is not burdened too much. Some agreements have a fixed increase written in them, while some follow the legal limit. There is no rule of minimum rent increase, but landlords usually increase the rent according to inflation and the market.