Why rental agreements are of 11 months?

Most rent and lease agreements are signed for 11 months so that they are able to avoid stamp duty and other charges.

Right from your bachelor days to your married life, we all have once lived in a rented house/flats. While living in rented accommodation we must have entered into a rental agreement with the landlord or the owner. Most of us do wonder why the agreements are for 11 months ?  not 12 months. Usually, neither owners nor tenants and not even real estate agents know why it is like this way. So, let’s find out. 

Rent agreement is also known as a lease agreement, rent agreement can be defined as a written contract between the landlord and the tenant who takes it on rent. The rent agreement is a legal document which binds both the owner and the tenant while safeguarding the interest of both the parties. It protects the tenant from eviction and unnecessary hike in rent without giving a notice of one month.

Rent agreement generally specifies the property details of the flat/accommodation (address, type and size), monthly rent, security deposit, the purpose for which the property can be used (residential or commercial) and duration of the agreement. The terms and conditions can always be negotiated but after the document is signed, it is bound by law on both the tenant and owner. Conditions for termination of the agreement are clearly mentioned.

As gathered from our expert on rental agreements, most of the rent agreements are signed for 11 months, as signing it for 11 months can avoid stamp duty and other fees. According to the registration act, 1908, the registration of rent agreement is mandatory if the leasing period is more than 12 months. If we register an agreement, registration fee and stamp duty need to be paid for it, so if we do it for 11 months it avoids paying stamp duty and registration charges. There is a little variation of stamp duty and registration charges in different states.

Registration fee in Maharashtra depends on the property to be leased out is located. The registration fee for properties located in municipal corporation limits is Rs 1000 while in the rural area it is Rs 500. The cost of the stamp duty and registration is to be borne by both tenant and landlord equally.

In Delhi, for instance, the stamp paper cost is 2% of the total annual rent of a year for upto5 years. For more than 5 years but less than 10 years, it is 3% of the value of the average annual rent of a year. For more than 10 years but less than 20 years, it is 6% of the value of the average annual rent of a year. Stamp paper can be purchased in the name of tenant or the owner.

In Maharashtra today most of the rental agreements can be done online.

To register your documents and to find accommodation in Navi Mumbai click here.