Why rent agreements are usually of 11 months only

So now you are ready to rent out your house and have taken on the process of drawing up a rental agreement. Before you take the leap find out how rental agreements actually work, the tenure of the agreement and other clauses. Here’s an overview of the whole process brought to you by Asset Homes, eminent builders in Kochi. Even if you avail a flat for rent in Kochi or Trivandrum, the same process applies - you have to sign the rental agreement.

Let’s check out…

What is a rent agreement?

The lease agreement or the rent agreement is a written contract between the owner of a property (the landlord) and the tenant who takes it on rent. It specifies the terms and conditions based on which the property is let out like:

• Description of the property (address, type and size)
• Monthly rent
• Security deposit
• Purpose for which property can be used (residential or commercial)
• Duration of the agreement.

You can negotiate the terms and conditions but once the agreement is signed, it is binding on both the landlord and tenant. The agreement also specifies the conditions under which the agreement can be terminated. 

Most rent agreements are signed for 11 months. Have you ever pondered on why most rent agreements are for a duration of 11 months? This is mostly done to avoid stamp duty and other charges. As per the Registration Act, 1908, the lease agreement registration is mandatory if the leasing tenure is more than 12 months. Stamp duty and registration fee need to be paid to register the agreement. The costs for this add up to nearly 2 - 3% of the annual rent. Apart from this comes the professional fees due to lawyers or other intermediaries in the deal. It is to avoid paying these charges that many landlords and tenants mutually agree not to register the agreements. In case you want to register a lease, the tenant and landlord can agree to share its cost. But generally what happens is, it is the tenants that have to bear the additional costs of registering and stamp duty.

A rent agreement of 11 months is a legal document and is 100% credible. It comes in handy and acts as a piece of evidence when a dispute comes up between the owner and the tenant. 

Any unregistered rent agreement of more than a year's validity is not admissible in the court as a piece of evidence if any dispute occurs. A hefty penalty is also levied for the lapse in registration of the rent agreement.

The stamp paper value is also as low as Rs. 20 - Rs.100 for a rent agreement of 11 months.

If you are on the lookout for flats for rent in Kochi or flats for rent in Trivandrum this insight may help you. Knowing why rent agreements are usually of 11 months can be beneficial for first-time renters. If you would like to buy a flat contact us at Asset Homes, the best builder in Kerala.