Most residential leases expire after an 11-month period. This is only to circumvent the payment of a higher stamp duty. If the term of a lease is one year or more, the contract must be registered with the court and a higher stamp duty must be paid. In Haryana, stamp duty on leases varies between 1.5 and 3% of the average annual rent, depending on the rental period indicated in the document. Registration fees vary between Rs 1,500 and Rs 16,000 depending on the amount of rent. The majority of leases in India are developed for an 11-month period to avoid the wrath of registration by both parties. “Despite the absence of registration, an 11-month lease is valid and allowed in court in the event of a dispute between the tenant and the landlord. It is precisely for this reason that most lease agreements are concluded in this way and are regularly reviewed or not, as both parties consider appropriate,” says Brajesh Mishra, a Gurugram-based lawyer specializing in real estate law. Data available with Makaan.com show that 21 percent of all homeowners who listed their properties for rent on the site expect their tenants to stay for at least a year. Why then are leases only signed for 11 months, one month less than one year? Ashok is the owner of a house with 2 bedrooms. He rents it on the monthly rent of Rs.
8000/- in Mahesh for a period of 11 months. Bail is Rs.50000/-. You`re making a lease on a 50 rupee paper. Things are going well up to 5 months. Mahesh pays the rent up to 5 months after which he stops paying the rent and also refuses to move. Ashok approaches the court. The Court imposes the agreement on the stamp duty of the deficit paid and imposes the fine up to ten times the stamp duty. So what will Ashok`s fine pay? Let`s do the math. The rental or rental agreement is written on a stamp paper. There are 2 types of rentals in India, one is a lease that lasts at least 12 months.
This is governed by the rent control laws enacted by the state government. The other type is a rental and licensing agreement of up to 11 months, which is not covered by rent control laws. However, while a lessor may immediately file an eviction action against a tenant after the expiry of the eviction declaration under Section 106 of the Transfer of Ownership Act, he cannot initiate such a procedure if the rent control laws apply, unless he can prove the existence of one of the reasons for eviction under the laws in force in that state.