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Frequently Asked Questions on the Creation of Rental Agreements in Bangalore

Otherwise known for its traffic, Bangalore is home to many startups and IT companies. As a result, the demand for commercial and residential space is high. Seeking job opportunities, a number of people travel to Bangalore and become a part of it. Though finding a job is relatively easy, the tough part is to get through the rental processing, especially the rental agreement.
Just when you put the term ‘rental agreement’ across, individuals see it as a task of great hassle. However, it is necessary for you to get proper information about the rental agreement and its processing in Bangalore. Below we address some of the frequently asked questions that will make it easier for you to get through the process in Bangalore.

What are the Different Types of Rental Agreements in Bangalore?

A number of landlords make the processing of the rental agreement a complicated process for the tenants so that they do not have to create a rental document and avoid paying tax. However, there are many benefits that a rental agreement brings with it for the tenant. So, you should always insist on the creation of one.
Basically, there are two types of rental agreements:

• Rental Agreement
• Lease Agreement

A rental agreement offers the right to tenancy to the tenant for a short period of time (typically 11 months). Once the duration ends, the period can be automatically renewed. The cycle continues until the landlord or the tenant wishes to end it with mutual consent.
The tenant has to pay monthly rent and a one-time deposit. In most cases the deposit is refundable.
As opposed to the rental agreement, a lease agreement is for a longer time period of 12 months or more. When any rental property exceeds the timeframe of 1 year, a number of laws apply to it. As a result, the legal documents for the same have to be framed very carefully.

As the time duration of the tenancy is longer, the deposit is high, which is paid when the tenant vacates the property. Unlike the rental agreement, the lease agreement is terminated after the lease expires. This means that the contract does not renew on its own. Both the tenant and the owner needs to go through the entire process to renew the agreement.
Till the new lease agreement is made, the tenant has to pay the rent on the daily or weekly basis.

How Much Security Deposit Can be Charged by a Landlord?

The government of India allows the landlord to collect a security deposit from the tenant before he moves in. The security deposit should not be more than a total of two or three month’s rent.
In case a tenant damages the property and absconds it, the owner can use the security deposit to cover the expense on the repair works. However, when the tenant is in the flat, and some kind of maintenance or repair work is needed, the owner cannot use the security deposit. He has to pay it from his pocket.
However, this has to be taken in writing while creating your rental agreement to avoid any conflict in future. Also, it is crucial to discuss with your owner about the refund. Some of the owners require tenants to look for their replacement, and only then they release the deposit.

What are some of the Pointers to Discuss with your Landlord before the Creation of Rental Agreement in Bangalore?

Having the critical issues resolved before moving in and taking the same in writing helps keep away potential conflicts in the future. Below are some of the aspects you need to iron out:

• Length of the Tenancy: You might have a bond signed at your office for 2 years and you require to stay at this place for the same period. In such a case, it is important that you put forward your request before the owner. If the owner has any concerns regarding the length of the period, he will mention it to you. This way, you can come to a mutual ground and decide the length of the tenancy.
• Rent Amount and Security Deposit: In most cases, the rent amount and security deposit are non-negotiable. However, you can try to get it reduced as much as possible before you move in. Also, the owner can’t ask for a security deposit that exceeds the rent amount of more than three months. Hence, you can discuss the same and come to a conclusion.
  At this point, you should also discuss the scenario when the rental agreement expires and the tenant continues to stay till he finds a new place.
• Number of People: Usually, there is no limit on the number of people, when the tenant brings his family to the property. However, in case you are a bachelor, the owner may restrict the number of tenants. In some cases, he may even levy restrictions on the opposite gender to enter the property.
• Access of the Landlord to the Property: This clause applies when the landlord is living in the same apartment/building as that of the tenant. Usually, there is a separate door in buildings to give the tenants the privacy they require. However, in the apartments, access to doors and some utilities may be common for tenants as well as the owner. In such a case, the tenant should ask and understand the access of the landlord to the property.
• Repair. Maintenance or Damage Cost: Your rental property may need a plaster or paint and your agreement is about to expire in two months. You would not want to spend maintenance on the property you are anyways vacating. This calls for a healthy discussion with the landlord before moving in. Make a list of the utilities and decide who pays for what.
  Also, if you think the building needs any repair prior to the lock-in period, you can get it sorted by the owner.

There are some other clauses with regards to food habits, late coming, drinking, smoking, pet ownership, etc., which you can discuss if at all it apply to you.

What is the Stamp Duty and Registration Charges in Bangalore for Tenancy Agreement?

Karnataka is the first state to replace conventional stamping with stamping completely. You need to notarize your rental agreement, even though it is for a period of 11 months, as a fraud-deterrent measure.
As per the law in Karnataka, the maximum stamp duty that can be collected is not more than Rs. 500 for the processing of a rental agreement. However, it is calculated as follows:

• Tenancy period equal to 10 years or less: 1% of the annual rent + deposit
• Tenancy period of more than 10 years: 2% of annual rent + deposit

Besides the stamp duty, the registration of the rental agreement is 1 % of the annual agreement + deposit. A number of people do not take the stamp duty and registration seriously. However, a legal rental agreement enables numerous rights for the tenants and landlords and can save them from any type of fraud from the other party.

What are the Legal Requirements for the Creation of a Rental Agreement?

Every state in India has its personal laws when it comes to legal requirements. In the state of Karnataka, the following are the legal requisites for the creation of a rental agreement:

• The rental property should be either used for residential or commercial purpose. The purpose of use has to be specified in the rental document.
• Every aspect has to be written in the rental agreement, no matter how unimportant it may sound.
• The rental agreement has to be created as a draft first to check for any edits and then printed on stamp paper of a minimum of Rs. 100.
• The tenant and the owner must decide who is paying for the stamp duty and registration of the rental agreement. They have to pay 1% of the yearly rent and deposit, or Rs. 500 (whichever is lower in value).
• The owner should take care of the rental property before handing it over on rent to the tenant. If the property needs painting or any type of repair work, the owner must undertake it.
• The tenant must bring to light if there is any type of damage to appliances or the property before vacating the rental property.
• All the documents presented during the creation of the rental property should be original. The biometric verification should be done.
• The registration process also needs two witnesses, their original identity proofs and their biometric impressions.
• The owner must give the tenant a copy of the rental agreement to present it as legal address proof during the lock-in period.
• If the tenant moves out of the property during the lock-in period, the owner may decide whether or not to release the security deposit paid by the tenant.

These were some of the important aspects to consider before renting a property. If you wish to get through the rental agreement process with utmost ease, you can simply log in to NoBroker and get doorstep delivery of your copy.