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Why Are Most Lease Agreements In India Only For 11 Months?

The amount of the stamp duty is determined by the rent and the length of stay.

Have you ever rented a house? Then your landlord must have instructed you to sign an 11-month lease. In India this is usually the norm. Although the agreement is renewable multiple times, have you ever wondered why most leases are only for 11 months?

A lease is a written document that describes the rights and obligations of the parties and the legal relationship between a landlord and a tenant. The terms of the agreement must be adhered to by both parties.

Legal experts argue that due to the complex procedures and laws that favor tenants, it is extremely difficult to vacate your property when it is rented out in India. It often takes years for the landlord to receive justice due to procedural delays, during which time the tenant can still use the property.

According to a report in Economic Times, you don’t need to register if the rent is less than a year. A lease with a term of less than one year does not need to be registered under Article 17 of the Registration Act of 1908. This means that leases shorter than one year can be signed without registration.

When a lease is less than a year, one can avoid paying stamp duty by choosing not to register the lease, which saves money.

The amount of the stamp duty is determined by the rental price and the length of stay if one chooses to register the rental agreement.

The longer the rent, the higher the stamp duty. Therefore, even if a lease is registered, a shorter duration will help to reduce the large lump sum that would be paid in stamp duty.

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Therefore, as long as it helps the landlord and tenant avoid paying a larger amount, both parties often stay on the same page. Many people choose to have their lease notarized instead of registering it.

According to a report in Financial Express, in the state of Maharashtra, there is a concept known as a leave and license agreement that can only be for a maximum term of five years. Under this arrangement, the owner or licensor permits the licensee to occupy the property only for the specific purposes set out in the agreement.

In Maharashtra, leave and license agreements are more common than lease agreements as the licensee is only given the right to occupy the property for a specified period of time while the tenant is given rights that are better protected by law.

A similar practice is prevalent in Delhi, where 11-month leases are more common than long-term leases.

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