What are the Types of Tenancy Agreements in India?

I learnt from my cousin, a lawyer, that a formal contract outlining the terms and conditions of the renting between a landlord and tenant is called a tenancy agreement. To prevent misunderstandings and disagreements, it is crucial that all parties make sure the conditions are agreed upon. He also said in India, there are 4 main types of tenancy agreements which I listed below.

4 Tenancy Agreements Types

Here are the different agreement types that govern the relationship between landlords and tenants.

Rental Agreement for 11 Months

This is the most common type of tenancy agreement in India, typically lasting 11 months. It is often used to avoid strict tenancy laws under the Rent Control Act, which apply to leases of one year or more.

The agreement can be renewed after 11 months and typically includes details of rent, deposit, maintenance, and termination clauses. Both tenant and landlord have the flexibility to negotiate terms without long-term legal implications.

Lease Agreement (Long-Term Tenancy)

A lease agreement usually lasts for a year or more and is governed by the Rent Control Act, which varies across states. It offers security to tenants by preventing arbitrary eviction, and rent increases are regulated.

This type of agreement is common in commercial properties and some residential setups and gives tenants more rights, but it may limit the landlord’s flexibility in evicting tenants.

Leave and Licence Agreement

This agreement grants the tenant a licence to occupy the premises rather than transferring possession, making it more landlord-friendly. It is common in states like Maharashtra, where the Maharashtra Rent Control Act governs it.

Typically lasting 11 months, this agreement is renewable and provides the landlord more control, allowing easier eviction and a higher flexibility.

Month-to-Month Rental Agreement

This is a short-term, flexible arrangement that is renewed every month. It’s suitable for tenants who may need frequent relocations and for landlords who prefer not to commit to long-term leases. Either party can end the agreement with short notice, usually one month.

I hope you understand the types of tenancy agreements.

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In India, renting a house may appear to be a two-step process. Selecting a rentable apartment is the first step. Moving in and negotiating rent is the next step. Or at least, this is what I used to think before I moved into a rental house. It was then that I realised that there is a third step that involves signing the tenancy agreement. In the event of a dispute, this document could become a source of contention if it was executed negligently. That is why I will tell you the types of rental agreements.

But before I tell you the different types of tenancy agreements, I will tell you what a tenancy agreement means.

A tenancy agreement is an authority record that characterises the landowner-inhabitant relationship. It specifies the terms of a rent or lease partnership between the property owner and the tenant. You will be permitted to occupy a property in accordance with the tenancy agreement as a tenant.

What are the types of tenancy agreements in India?

• Rent Agreement

A legal contract between a property owner and a tenant is referred to as a rent agreement. Names of both parties, a description of the property, the rent amount, the security deposit, late payment penalties, a grace period, amenities for the tenant, parking rights, property maintenance, and responsibilities for repairs are all mentioned in the agreement.

As a general rule, lease arrangements are finished paperwork for a considerable length of time or less in India. The registration of a rent agreement is not required by law.

• Lease Agreement

A legal contract between a landlord and a tenant is referred to as a lease agreement. A lease allows a tenant to use the property for a set amount of time. This time span is by and large over a year and can reach out to any term as concurred by the two gatherings.

A rent understanding must be enrolled for it to become legitimate. When you sign and register a rent understanding, no party can change the agreements referenced in the arrangement.

• Leave and License Agreement

A landlord and a tenant sign a leave and license agreement. It gives the licensee (tenant) permission to live on the property of the licensor (landlord). The Leave and License agreement, not the tenancy, grants permission to occupy the property as a licensee. A license and leave agreement must be registered.

These are the types of rental agreements that you should be aware of.