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Leave and License Agreements: Meaning, Calculator, Format and Registration in 2024
Updated : September 11, 2024
Author :
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People residing in leave and licence accommodations don't usually have bills, electricity bills, telephone bills, or water bills issued in their names as they are in the name of the owner of the premises. As a result, most migrants find it difficult to furnish proof of a local address. A Leave and Licence Agreement, once registered, can be used as proof of residence for the occupier in addition to proving the legitimacy of one’s license. It is important to know the stamp duty on leave and licence agreement so as to avoid unnecessary dues.
What is a Leave and License Agreement?
A leave and licence agreement or a leave licence agreement is a legal instrument that allows one party to allow another to use their immovable assets, such as property, for a fixed period of time without changing the asset's ownership. In India, landlords and renters frequently employ leave and licence agreements, particularly in the rental housing sector. However, lease agreements are more typical in the commercial real estate sector. Leave and licence agreement charges are payable per the government's rules.
Rights of the Tenant - To use the premises for a certain purpose by the terms of the agreement.
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Leave and License Stamp Duty Calculator
The stamp duty on rental agreements consists of a flat charge of 0.25% of the total rent for the time that must be applied to all leave and licence agreements. It's worth noting that the stamp duty rate is the same for both residential and commercial properties for a period of up to 60 months.
Given below is the Leave and license agreement stamp duty, aka rent stamp duty calculator –
The stamp duty for leave and licence agreement is calculated for 12 months, regardless of the length of leave and licence, and includes any advance rent paid or to be paid, as well as any deposit paid or to be paid, with or without interest. (The calculation is the same whether the licence is for one month or 60 months.)
Make sure you are informed of the stamp duty on the leave and licence agreement to avoid any unnecessary dues.
How Does one Calculate the “Stamp Duty” Payable?
When registering a Leave and Licence Agreement for stamp duty, specific amounts must be paid as “Registration Fees” and “Stamp Duty” to the Registrar of Assurances, a State Authority.
Following the prevailing laws, the below formula can be used to find out the stamp duty payable on a Leave and licence Agreement (For a term not exceeding 60 months, including a renewal clause):
- License Fee per month x Number of months = [A]
- 10% x Refundable deposit x Number of years of the agreement = [B]
- Non-refundable deposit / Advance Licence Fee = [C]
- Total economic value subject to Stamp Duty = [D] = [A] + [B] + [C]
- Stamp duty = E = 0.25% x D
Clearly, the higher the monthly Licence Fees and deposit, the higher the stamp duty.
However, should the Leave and Licence Agreement be for a period exceeding sixty months (with or without a renewal clause, the valuation of Stamp Duty payable would differ substantially following prevailing laws and the adjudicated value of the property.
Read: The Ins and Outs of Purchasing Your First House with Section 80EE
Registration of Agreement
The law does not prescribe any minimum or maximum period for which a license may be granted. While not mandatory (except in the State of Maharashtra), it is highly recommended that a Leave & License Agreement for a term below a period NO BROKER—II—30.9.2019 of one year be registered.
By virtue of an Instrument or Deed, which by itself does not create any Right, Title or Interest in an immovable property does not require registration.
Read: Sales Deed Vs. Sale Agreement, What Do You Need?
Leave and Licensing agreement for Mumbai and Maharashtra – As per the laws on stamp duty on leave and licence agreements in Maharashtra, any agreement for leave and licence or letting any premises entering between the landlord and the tenant or the licensee, as the case may be in writing and to be registered. The government has introduced e-registration for leave and licence agreements in Maharashtra to streamline the process. You may visit the Leave and Licence Agreement main page of the Government of Maharashtra's online filing portal to learn more.
Besides, the responsibility of getting such an agreement registered shall be on the landlord and in the absence of the written registered agreement, the contention of the tenant about the terms and conditions subject to which premises have been given to him by the landlord on leave and licence or have been let to him shall prevail, unless proved otherwise.
Note: All calculations are done with Mumbai as an example, consult your state authorities for the prevailing statutory dues payable in your state.
Read Everything You Need to Know About Maharashtra Land Records
Leave and License Agreement Format
A leave and licence agreement word format is a legally binding document that grants temporary rights to use a property without transferring ownership. This agreement is often used for rentals and can be customized in a Word format for easy edits, ensuring clear terms between the licensor and licensee.
This rent agreement is made on this __________ (date) by ________________ (name of the landlord) S/o _______________ (father’s name of the landlord), Address: ___________________________________________________ (residential address of the landlord). Hereinafter called the Lessor/Owner, and first party
AND
_____________________________ (Name of tenant), called lessee/tenant, or second party
The expression Lessor/Owner and the Lessee/Tenant shall mean and include their legal heirs successors, assigns, representatives etc.
Whereas the first party is the owner and in possession of the property No: _______________________________________________________________________________________________ (address of rented property) and has agreed to let out the said property to the second party for a monthly rent of Rs. ______/- (in words) per month.
Now, This Rent Agreement Witness as Follows:
That the second party will have to pay Rs. ______/- (in words) as monthly rent, which does not include electricity and water charges.
That the second party shall pay one month rent in advance to the landlord that would be further adjusted in the monthly rent.
That the second party shall pay the water and electricity charges on the basis of the consumption to the landlord/owner.
That the second party shall not lease the property to a subtenant under any circumstances without the consent of the owner/landlord.
That the second party shall follow all the rules and regulations, and by-laws set by the local authorities in respect of the leased property and will not get involved or do illegal activities on the leased property.
That this rent agreement is granted for a period of eleven (11) months starting from ___________, and this contract can be extended further with the mutual consent of both parties.
That the second party shall not be permitted to do construction in the rented premises. Besides, he/she could do the installation of temporary decoration, wooden partition/cabin, air conditioners etc. without seeking the permission of the landlord.
That the second party is not allowed to make any alteration in the rented property without the written consent of the owner.
That the second party will have to allow the landlord or his authorized agent to enter into rented premises for its inspection or general checking for any repair work if needed.
That the second party shall keep the premises clean.
That the second party shall bear the cost of day-to-day minor repairs.
That this contract/agreement could be revoked before the expiry of this tenancy period by serving a one-month prior notice.
That both the parties have read and understood this agreement and have agreed to sign the same without any pressure from any side.
In WITNESS WHEREOF
The landlord and the tenant have hereunto subscribed their hand at ______ (place) on this the _____________ (date of rent agreement) year first above mentioned in presence of the following witnesses.
Witnesses:
1.
2.
___________ (name of the landlord) _________________ (name of the tenant)
Lessor Lessee
Differences Between Lease and Leave and License Agreements
- Unlike a leave and license arrangement, a lease develops an interest in the property.
- A lease gives a renter exclusive possession of the property, but a leave and license arrangement just allow them to occupy it.
- Leases are not revocable, whereas licenses are.
- The grantor does not choose the terms of leases, but the grantor does determine the terms of licenses.
- Leases can be transferred, while licenses cannot.
- Unlike licenses, a lease creates inheritable rights.
Stamp duty on leave and license agreement are payable at least amount and then varies according to the type and size of the property. The above article gives you all the information about the Leave and license agreement and how you need to go about it. Looking to move to a new house? NoBroker offers the best assistance at the best rates. Drop a comment down below and our executive will be in touch with you.
Frequently Asked Questions
Ans: A leave and license agreement differs from a rental or lease agreement in that it is controlled by the Indian Easement Act of 1882.
Ans: A Leave and License arrangement allows the Licensee to occupy the licensor's property, which would be illegal without such authorization.
Ans: A rental agreement must be registered under the Registration Act of 1908 if it is for a term of more than 12 months. As a result, leave and license agreements are normally for 11 months to save stamp duty and registration fees.
Ans: The leave and license agreement - the maximum period is 60 months.
Ans: The leave and license registration fees for first-time registration are Rs. 1100.
Ans: A Leave and License Agreement is a legally binding document that allows a licensor to temporarily grant the right to use their property to a licensee for a specified period. It outlines the terms and conditions of the agreement, such as the duration of the agreement, rent amount, and other relevant clauses.
Ans: Yes, you can create a Leave and License Agreement online. Many online platforms offer customizable templates that you can fill out and download as a PDF. You can also choose to have the agreement e-signed for added convenience.
Ans: Some disadvantages of a Leave and License Agreement include:
The licensee has no legal ownership or right to transfer the property to another person.
The licensor may be unable to sell the property during the agreement's duration.
The licensor may not be able to evict the licensee easily if they violate the terms of the agreement.
Ans: Yes, you need a stamp paper for a Leave and License Agreement. The amount of the stamp paper depends on the state where the agreement is being executed. In some states, the Leave and License Agreement stamp duty is fixed, while in others, it is a percentage of the rent amount.
Ans: A Leave and License Agreement grants the licensee temporary permission to use the licensor's property for a specified period. In contrast, a Rental Agreement creates a tenancy relationship between the landlord and tenant, where the tenant has a right to occupy the property for a longer period, and the landlord cannot evict the tenant without following due legal process.
Ans: Yes, you can register your leave and license agreement online through the government's e-registration portal. All you need to do is create an account, fill out the necessary details, pay the applicable fees, and schedule an appointment for biometric verification. Once the verification process is complete, you will receive a registered copy of the agreement via email.
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We’d love to hear your thoughts
Katlyn
Hi, its fastidious piece of writing on the topic of media print, we all be familiar with media is a great source of information.
vrushank
In gujarat if any landlord want to give commercial property on rent leave and license or lease than which is safer agreement for landlord.
Nobroker
Thank you! We appreciate your feedback on our blog about stamp duty registrations. It is our ongoing series and we hope to keep you interested with more exciting and relevant content.
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