Guide to Rent Agreements, Lease, Licenses, and Negotiating Rental Terms in India

Guide to Rent Agreements, Lease, Licenses, and Negotiating Rental Terms in India

In India, renting a property is a common practice, whether it's for residential or commercial purposes. However, to ensure a smooth and legally binding arrangement between landlords and tenants, it is essential to understand the concepts of rent agreements, leases, licenses and how to negotiate them. This article aims to provide a comprehensive guide to these aspects. 

What are Rent/Lease Agreements?

Rent/Lease Agreements: A rent/Lease agreement is a legal document that outlines the terms and conditions of the rental arrangement between a landlord and a tenant. It serves as proof of the agreed-upon terms and helps prevent disputes. Lease has been defined in Section 105 of the Transfer of Property Act, 1882 which states, “A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms”.

Some essential aspects of a lease include:

a. Duration: A lease agreement specifies a fixed term, often 11 months or more, during which the tenant is entitled to occupy the property.

b. Renewal and termination: The terms for renewal or termination of the lease should be clearly stated, along with any penalties or notice periods involved.

c. Rent escalation: Lease agreements often mention provisions for rent escalation, specifying the percentage increase in rent after a certain period.

d. Subletting: The agreement should clarify whether subletting the property is allowed or not.

e. Maintenance responsibilities: The lease agreement should outline the maintenance responsibilities of both parties.

f. Names and Addresses of both parties i.e. Lessor/Landlord and Lessee/Tenant.

It is always advised that prior to executing a tenancy, a properly drafted rent/lease agreement by a legal professional must be agreed upon by both the parties in order to prevent clarity on the tenancy terms and avoiding future disputes.

What are Licenses?

Licenses: A license refers to a permission or authority granted by one person (licensor) to another person (licensee) to do something on the licensor's property that would otherwise be considered a trespass. It is important to note that a license does not create any interest in the property but only provides a personal right to use or access it. Section 52 of the Indian Easements Act, 1882 states, "Where one person grants to another, or to a definite number of other persons, a right to do, or continue to do, in or upon the grantor's immovable property, something which would, in the absence of such right, be unlawful, and such right does not amount to an easement or an interest in the property, the right is called a license."

Key Features of a License:

Revocable: A license is generally revocable at the will of the licensor unless it is coupled with a grant or supported by a contract. This means that the licensor can withdraw or revoke the license at any time without providing any specific reason.

Personal Right: A license does not confer any ownership or possessory rights on the licensee. It is merely a personal right granted by the licensor, allowing the licensee to use or access the property in a specified manner.

Limited Scope: A license is usually granted for a specific purpose or activity and is limited in its scope. The licensee cannot exceed the terms of the license or use the property for purposes beyond what has been authorized.

Non-transferable: In most cases, a license is non-transferable, which means that the licensee cannot assign or transfer the license to another person without the licensor's consent. 

Want to know the difference between lease/Rent Agreements and Leave & License Agreements? Click this link to know more.


Negotiating a Rent/Lease

Rent or a lease agreement are vital documents when it comes to tenancy and must be carefully negotiated, drafted and executed as they become the sole basis in case of any dispute that may arise in the future. When negotiating rent or lease terms, start by researching the rental market to understand average rates. Determine your specific needs and make a reasonable initial offer, highlighting your qualifications as a reliable tenant. Point out any property features or issues that could be used as leverage. Consider negotiating additional terms such as lease duration, renewal options, and maintenance responsibilities. Be flexible and open to compromise, exploring alternatives if the landlord is unwilling to adjust the rent. Seeking professional legal assistance is needed to navigate the negotiation process effectively.


We have tried to cover every aspect related to the above-mentioned topic, however in case we have missed something, you can reach us at +91 9810729455 or mail us at

Did you find this write up useful? YES 0 NO 0

C2RMTo Know More

Something Awesome Is In The Work









Sign-up and we will notify you of our launch.
We’ll also give some discount for your effort :)

* We won’t use your email for spam, just to notify you of our launch.

SAARTHTo Know More

Launching Soon : SAARTH, your complete client, case, practise & document management SAAS application with direct client chat feature.

If you want to know more give us a Call at :+91 98109 29455 or Mail