What Is A Rent Agreement And Why Is It Important

What Is A Rent Agreement And Why Is It Important Rent Guide

Renting homes is a long-standing practise in our society, with laws and rules controlling the Landlord-Tenant relationship enacted by the government from time to time. Bad experiences by either party, along with long-pending legal issues, led to the awareness that further legislation is necessary to oversee the Tenancy and advise Courts in case of legal disputes over an equivalent. 

There are a slew of legalities to consider while renting out a home or taking one on rent. Landlords and tenants need to engage in paperwork in order for rental agreements to be legally binding. The terms and conditions outlined in the rental agreement are binding on both the Licensor and Licensee.

Who is a Licensor?
In an owner-tenant arrangement, the Licensor is the person who owns the rental premises also called as landlord or owner and is entitled to collect the rental payment for that specific rented premises.

Who is a Licensee?
A licensee is someone who has the permission of the owner to utilise the licensor's property for commercial or residential purposes, and has to pay a predetermined sum of rent agreed upon and accepted by both parties.

In Maharashtra, it is necessary to register the leave and licence agreement regardless of the rental duration, unlike in many other states where registering a rent agreement is optional for rentals of less than 12 months.

For a property in an urban region, the tenant or homeowner must currently pay 0.25 percent stamp duty and a registration cost of Rs 1000, the fee for rural regions is Rs 500.

Document registration: Document registration aids in the maintenance of discipline in real estate transactions. The registered document is legally binding, and any breach of its terms and conditions will result in legal action. Registration has the following advantages:

  1. Ownership rights are legally defined.

  2. Aids in the protection of the owner's & tenants rights and interests.

  3. If the agreement is recorded, the landlord is more secure.

In India, there are several types of Agreements. A rent agreement includes basic information such as the name of the property's owner, the tenant, the length of the agreement, and the amount of rent to be paid throughout the term of possession. 

     Difference between a Rental Agreement and Leave and License Agreement


Leave and License

Rental Agreement

Governed by

Indian Easement Act, 1882

Rent Control Act


Short term contract generally 11 months

Long term contract and a fixed contract

Change in rent

Changes in rental amount is possible

Once a rent agreement is signed
no changes in this contract is possible.


It is for a short period of time and after
that it needs to be renewed further.
Rent can be increased after 1 year

Fixed amount paid as rent and has no
minimum/maximum tenure

Heritable rights created




Easily achievable

Not easily achievable

Stamp Duty

Substantially lesser than rent agreement

High stamp duty charges

The major aim of this agreement is to avoid contract violation or to take action against the licensee, such as when rent is not paid on a monthly basis, in which case the licensor can move to court. Because a leave and licence agreement does not fall under India's rent control laws, the occupant cannot claim ownership of the property. To bridge the gap between Landlords and tenants, the Model Tenancy Act was introduced by the government. It intends to formalise the rental housing shadow market, release unoccupied properties, boost rental returns, reduce/eliminate exploitative activities, reduce registration procedural bottlenecks, and promote transparency and discipline.
If you want to register a rent agreement in Mumbai you can register your rent agreement online with the help of a lawyer or register directly on Maharashtra government website. 
It is imperative for tenants to know their rights as a tenant and with a motive to look after the rights of both tenant and landlord, the Model Tenancy Act was introduced by the government. 


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