Rental contracts in India

Contract types and conditions

Rental contracts in India

Renting in India can be a complicated experience. As in many places, there are traps and scams you need to watch out for when signing the rental contract.

Many landlords prefer to rent without a rental contract to avoid tax payments. However, you should insist on a contract as proof of a permanent address in India. You will need it when applying for a PAN card (see our Money section ).

You should use the help of a real estate agent when setting up and signing a rental contract. Alternatively, you could engage the services of a relocation specialist who will help you through the process.

There are basically two types of rental contracts in India: lease agreements with a minimum of 12 months, which are covered by rent control laws, and lease and license agreements of up to 11 months, which are not.

Lease Agreements covered by rent control laws have set rents determined by local state governments. Prices are generally determined by the cost of building construction and the land´s market price. Pricing is based on costs of the year of construction. Therefore, older properties are always cheaper than newer properties. If an apartment is part of rent controlled housing, its price can only be increased very little each year.

When signing a lease agreement for a minimum of twelve months, ownership of the rental property is transferred to the tenant for an indefinite period of time. This causes problems for landlords as there have been many cases of tenants refusing to move out of a flat in India. Court cases can easily take up to ten to twenty years to resolve.

For this reason, most landlords prefer lease and license agreements. They only guarantee tenants the right to live in the rental object for eleven months. Periodic renewal is possible. These 11-month contracts circumvent rent control laws, giving more rights to landlords.

Rental contracts in India will usually be in English, so you will be able to check them before signing. Make sure that any additional agreements made between you and the landlord are specifically stated in the contract.

It is also possible to have short term leases for less than eleven months, but rents are usually more expensive.

Payment of the rent

Rent is paid in rupees either in cash or check, one month in advance. Since bank transfers are uncommon, owners usually don’t accept them. You may be asked to pay a part of your rent in cash and another part as cheque if your landlord is trying to reduce tax payments. Rental prices do not include utilities.

Rental deposits in India

Rental deposits in India will usually be around two to three months advance rent, but since landlords can set the deposit amounts themselves, you may have to pay much higher deposits. An extreme example is Bangalore where landlords have been known to demand up to ten months rent in advance. This is mainly due to the booming IT industry in Bangalore and the fact that people are actually willing to pay these sums. If you are asked to pay that much, try to negotiate.

You will generally have to pay your deposit upon signing the lease. Don’t forget to ask for a proper receipt for the deposit stating that your landlord has received the payment.

When moving out you will get your deposit back approximately one week after you and your landlord have checked the rental property for damages. In the event that you move out before the end of your contract you will not get your money back.

House Insurance in India

If you rent a place in India you should get a household insurance policy to cover your personal belongings. There are many international insurance companies operating in India and you might be eligible for special offers as expatriate.

Further reading

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