Leave and License vs Rent Agreement in India: Which Should You Use?
Both are legal, but they are very different. Understand the difference in protection, stamp duty, registration, and which one to sign in Maharashtra, Karnataka, and Delhi.
The two documents explained
In India, a property can be occupied under either a lease/tenancy (a rent agreement) or a leave and license agreement. The difference sounds technical but changes your rights dramatically:
- Rent agreement (lease/tenancy): gives the tenant an "interest in the property" — a legal right to occupy. Eviction is harder and rent acts protect the tenant.
- Leave and license: gives the tenant only "permission to occupy" — they have no legal interest in the property. You retain the right to recover possession, which makes it far easier to reclaim your property.
Which one do landlords prefer?
Most landlords in India — especially in Maharashtra, Karnataka, and Delhi — prefer a leave and license agreement because it is easier to terminate. When a license period ends, the occupant must vacate; there is no tenancy right to fight. This is the standard choice for apartments in Mumbai and Bangalore.
Stamp duty and registration
The costs differ meaningfully:
- Leave and license in Maharashtra: stamp duty of 0.25% of the total consideration (e.g. ₹5,000 on a ₹20,00,000 total license fee), plus registration.
- Leave and license in Karnataka: stamp duty of 0.25% of the average annual rent, capped at ₹10,000, plus registration of ₹1,000.
- Rent agreements: stamp duty varies by state and rent amount; agreements above 11 months (often 12-36 month leases) must be registered.
The 11-month rule
You will often see agreements drawn for exactly 11 months. This is not a legal requirement — it is a practice to avoid mandatory registration (which kicks in above a year in some states) and to make the tenancy easier to renew or end. An 11-month leave and license is the most common structure for Indian apartment rentals.
Which should you choose?
If you want flexibility to reclaim your property easily, use a leave and license. If you are renting to a long-term commercial tenant or want a longer, more stable arrangement, a rent agreement/lease may suit. When in doubt, consult a local lawyer — a few hundred rupees now can save a court battle later.
How TenantsFlo helps
TenantsFlo stores the agreement type and term for each tenant, tracks when the agreement expires, and alerts you before the term ends — so you can renew, renegotiate, or end it on time instead of waking up to a tenant who has acquired rights by default.
Put this into practice
Track rent, deposits, and escalations automatically with TenantsFlo — free to start.