When it comes to renting a property, not all tenancy agreements are structured the same way. Some tenants prefer the flexibility of an 11-month agreement, while others may opt for the stability of a 3-year contract. Since the type of agreement significantly shapes the rental experience, Infinity Housing explains the different types of tenancy agreements commonly used in India.
Tenancy agreements are essential for preventing disputes between landlords and tenants. Each type of agreement is governed by different laws. For example, rent agreements are usually governed by the Rent Control Act, while Leave and License agreements fall under the Indian Easement Act. Let’s explore the main types of agreements:
Types of Tenancy Agreements in India
1. Rent Agreement
A rent agreement is a legal contract between a residential property owner and a tenant, allowing temporary possession of the property. It outlines facilities, parking provisions, and responsibilities for property upkeep.
Key features:
- Usually short-term (11 months), making registration optional and reducing stamp duty and registration costs.
- Provides tenants the flexibility to upgrade if the rental situation doesn’t suit them.
- Rent may increase upon renewal after the 11-month period.
Expert Advice: Rajesh Rai, Managing Partner at RR Legal Partners LLP, says:
“Rent agreements are essential as they allow parties to enforce terms legally. Agreements over 11 months must be registered to be admissible in court. Important laws include the Transfer of Property Act, Specific Relief Act, Evidence Act, and Registration Act.”
2. Lease Agreement
A lease agreement is generally used for longer-term occupancy, often for commercial spaces. Leases typically cover two to three years or more.
Key features:
- Fixed rental amount protects tenants from market fluctuations.
- Lessees (tenants) cannot be evicted except as per agreement.
- Must be stamped and registered to be legally valid.
- Governed by Rent Act, Section 105 of the Transfer of Property Act, 1882, and Indian Contract Act, 1872.
Note: Property owners might lose potential income if market rates rise during the lease. A Power of Attorney (PoA) can be granted to manage rent collection or legal matters if the owner resides elsewhere.
3. Leave and License Agreement
This agreement is temporary and governed by the Indian Easement Act, 1882. Unlike leases, it does not transfer ownership interest to the tenant and is non-transferable and revocable.
Key differences compared to lease agreements:
| Parameter | Lease Agreement | Leave & License Agreement |
|---|---|---|
| Transferable | Yes | No |
| Inheritable | Yes | No |
| Creates interest in property | Yes | No |
| Affected by sale of property | No | Yes |
| Notice for termination | Yes | No |
| Permission for subletting | Yes | No |
| Revocable by landlord | No | Yes |
| Power of Attorney | Yes | Yes |
Key Components of a Tenancy Agreement
Regardless of the type, a tenancy agreement should clearly outline:
- Property Description: Address, layout, size, fittings, and fixtures.
- Security Deposit & Refund: Amount to be paid and conditions for refund at tenancy end.
- Termination & Renewal: Conditions for ending the agreement and renewal process.
- Rent Amount & Due Date: Monthly rent and mode of payment.
- Parties’ Details: Names and addresses of landlord and tenant.
- Tenancy Term: Start and end dates, plus renewal clauses.
- Maintenance Responsibilities: Who handles repairs and upkeep.
- Subleasing & Alteration Restrictions: Limitations on subleasing and making property changes.
Tenancy agreements can be customized based on mutual consent, from fixed-term rentals to periodic tenancies, sub-leases, or rent-to-own agreements. Always review and understand terms before signing.
Frequently Asked Questions
There are three main types:
- Rent Agreement (short-term)
- Lease Agreement (long-term)
- Leave and License Agreement (temporary, revocable)
Lease agreements are generally 2-3 years or more, depending on mutual consent. Longer agreements must be stamped and registered.
No. Simply living in a property under a lease or rent agreement does not confer ownership rights. Ownership remains with the landlord unless legally transferred.
If you want, I can also create a simple infographic showing all three tenancy types and their differences for Infinity Housing, making it easier for readers to understand at a glance.
