How to Prepare a Rental Agreement in Delhi?

Renting an apartment or house in India is not as easy as one would think. Learn how to prepare a rental agreement in Delhi in this blog

The following are the brief steps taken to prepare a rental agreement in Delhi:

1. Write the contract;
2. Print the contract in the prescribed format of appropriate value;
3. The agreement should be signed in the existence of two eyewitnesses by both the Landlord and the renter;
4. Pay the relevant fees and register the contract at the sub-office.

Delhi is one of the first locations designated as a Metro city. Besides being the seat of the most powerful government, the city is also known for its rich history and numerous historical sites. It is paired with a friendly environment and bustle of activity, making Delhi a popular destination for job seekers.

Creating the Contract

You must complete the following steps to draught the rental agreement:

• Arrange a rough draught with facts such as names of concerned parties and property description indicated;
• Add crucial provisions to the document;
• Acquire stamp paper of prescribed threshold, print your draught on the prescribed format. You can also use our rental agreement solution, and we will handle everything for you;
• Register the property at the local Sub-Registrar office with the signatures of both the renter and the proprietor in the presence of 2 eyewitnesses.

Enrollment & Stamp Duty

Stamp Duty is a tax paid by taxpayers whenever a contract or trade is made. The amount of the transactions are used to compute Stamp Duty. It is contributed to the administration by purchasing Stamp paper with the appropriate denomination.

Stamp paper varieties: classic Stamp paper and e-Stamp paper.

e-Stamping: Delhi

Delhi has completely abandoned traditional stamp paper systems favouring the Stock Holding Corporation of India’s e-Stamping system (SHCIL). If a person needs Stamp paper, they might acquire it from e-Stamping merchants. In the online application, you must include your identity and the reason for your visit. In Delhi, classic stamp papers will no longer be utilised.

Enrollment

Everyone must follow the procedure for registering a rental agreement deed in Delhi.

Fees associated with registration:

• The Stamp paper price is 2% of the total yearly rent + ₹100 for the downpayment paid for a rental of up to 4 years. For five to 10 years, 5% of the estimated annual rent. For ten years and more to less than 20 years – 5% of almost double the average annual rent value;
• For the application fee, a Demand Draft (DD) of ₹ 1100 is required;

The owner must present the following documents for registration:

1. The initial proof of property ownership or title;
2. Two passport-size photographs;
3. Aadhar card or receipt is required when applying for it;
4. Identification (driver’s licence, voter’s ID, passport, etc.);
5. The written rental agreement on Stamp paper;
6. A DD for ₹1100 to cover registration fees;

The tenant must produce the following documents for registration:

1. Two passport photographs;
2. If the individual is an Indian, the Aadhar card or the voucher was received while registering for it. An original passport is required if the individual is a foreigner;
3. If the renter is a corporation, the person registering the lease should submit a board resolution/authorisation letter from the corporation stating the individual’s right to identify the contract and the corporation’s seal;
4. The Authorisation deed should be produced if one party supports another party for certification.

Is it Necessary to Have the Rental Agreement Notarised?

Some people choose to have their rental agreements notarized, but this is not the same as registration. As a result, a legal document rental agreement can never be used in place of a registered deed. In a dispute, courts will not consider them as proof. You must still register the deed, even if it is notarized.

Many Stamp Dealers claim that notarising an unlicenced document will make it a piece of valid address evidence with a Notary seal, yet no statute states this. A Notary seal signifies that you have verified it before a Registrar.

Commonly Used Rental Agreement Types

We will talk about the three types below

11-month lease

• In Delhi, the average rental period is 11 months, with the annual contract after the 11th month.
• The tenant is responsible for paying monthly rent. The charges for power and water must be paid.
• There are also management fees to pay for preserving the communal areas.

Long-Term Rental

Another standard rental option is a long-term rental for a set period. The renter does not have to pay the monthly rent. However, the owner must return the rent amount to the renter at the end of the lease. In addition, the tenant is responsible for regularly paying for power, sewage, and repair. The lease sum is not subject to interest.

Lease for Commercial Property

The licencing and stamp tax procedures for office spaces are the same as residential buildings.

Registering a business lease and the Stamp Duty linked with it is identical to writing a tenancy contract.

Things to Consider When Renting

Finding a suitable rental property is a minute, energy-intensive endeavour. The Delhi Rent Control Act of 1958 regulates rent and leasing in Delhi. The individual who rents the house is known as the renter or leasehold, and the person who rents it out is known as the owner, proprietor, or leaseholder. it is always advised to have better legal advice before starting the process. Make sure of the following details when renting a house or flat:

• Whether you’re interacting with the proprietor directly or a 3rd party posing as the owner.
• Whether you have to pay any commission or royalty charges to a realtor. The commission or royalty is typically half or a whole month’s lease.
• Confirm that the house belongs to the claimant ownership. Again, check your power or tax liability for this.
• If you pay a nominal advance, be sure you get a receipt from the proprietor. You can also pay by check, DD, or internet transfer.
• Discuss all terms of service at the outset.
• The owner and renter should have a formal agreement that spells out all relevant service terms.
• The contract should be published on government-issued stamp paper.
• Both the proprietor and the renter should sign the lease.
• The proprietor should carefully paint the property or flat and hand it back to the renter in excellent condition. The tenant must do the same when leaving the premises.
• Regardless of the agreement period, register it with the Sub-Registrar office by submitting the fees. A legally binding agreement that has been recorded is always safe. In Delhi, landowners must make tenant identification at the nearest police station. The Landlord must supply the police with the renter’s information, and the tenant must likewise cooperate. Failure to comply with the law is illegal.

Consequences

People frequently create rental agreement on Stamp paper with minimum amounts such as ₹20, ₹50, ₹100, etc. It is done to save funds on paying the government’s actual Stamp Duty payments. The difference between the government and minimal charges is usually insignificant. Things are fine as long as there is no legal issue between the proprietor and the renter.

Unlicenced rental deeds are never admissible in court. It is merely incidental evidence that can be used to support a claim. As a result, registering a rental agreement is critical to being safe.

Conclusion:-

Since this article discusses the specifics of the rental agreement process, you can now create your own and have it sent on Stamp paper. In addition, some services provide pre-drafted, prepared leasing agreements that a lawyer has reviewed. 

Read more:-

• Rental Agreement in Maharashtra 
• What is Tenure of Rental Agreement?
• Terms and Conditions for Rental Agreement