Most leases are signed for 11 months so they can avoid stamp duty and other fees. Under the Registration Act of 1908, registration of a lease is mandatory if the tenancy period is more than 12 months. If an agreement is registered, stamp duty and registration tax must be paid. For example, in Delhi, for a lease of up to five years, stamp paper costs 2% of the total annual rent of one year. Add a flat fee of Rs100 if a security deposit is part of the agreement. For a lease of more than 5 years but less than 10 years, it represents 3% of the value of the average annual rent for a year. For 10 years and more, but less than 20 years, it is 6% of the value of the average annual rent of a year. The stamp paper may be in the name of the tenant or landlord. In addition, a flat-rate registration fee of EUR 1,100 million must be paid by the draft application (DD). Thus, to avoid the payment of 2,500 Rs. stamp duty at the time of registration of the contract, the landlord-tenant duo resorts to the signing of a lease for a period of one month less than one year. In this way, they sign the agreement and record it out of 100. stamp papers.
Under Delhi`s Rent Control Act, for example, landlords can increase their rent by 10 percent after three years – the common practice is to increase rent by 10% each year. When reconstituting the unit with the prior permission of the tenants, landlords can increase the rent amount by up to 15 per cent of the cost of the supplements made in the property. “From a monetary point of view, it would be costly for a tenant to enter into leases for a period of more than 11 months. From a legal point of view, it would be quite complicated for the owner,” adds Mishra. Leases under the Indian Easements Act of 1882 as vacation and licensing contracts for an 11-month period are not valid under rent control laws. Rent control laws, which differ from state to state, have under their control all leases concluded for a period of at least one year. These archaic laws, widely enforced worldwide after the Second World War, set strict rules that complicate rentals, especially for the owner. Landlords who rent their premises under these laws, for example, will find it extremely difficult to revise rents and evict tenants.
Therefore, extending the duration beyond this time would have many effects. From a monetary point of view, an extension of more than 11 months would not be cost-effective and, from a legal point of view, the whole process will be slow. The tenancy agreement (also known as a tenancy agreement) is a legal document signed between the landlord and the tenant. This contract binds both parties and protects their interests. It mentions the general terms and conditions of rental of property and contains information provided by landlords, tenants and property. It also includes monthly rent, duration, purpose of use of real estate, whether residential or commercial buildings, etc. The 11-month contract is currently under extensive review. It should be noted that such leases are generally entered into for residential real estate and not commercial real estate, as they have a longer lease term and these documents must be registered. Section 107 of the Transfer of Ownership Act states that “the rental of real estate from one year to the next, or for a period of more than one year, or the booking of an annual rent, can only be done by a registered instrument.” However, in this particular case, the HC contract gave importance to the following paragraph of section 107, which states that “all other land leases may be made either by a registered instrument or by a verbal agreement with the surrender of the property.” Section 49 of the Act also states that a registration document that is not registered “cannot be obtained as evidence of a transaction relating to that property.” The court found that when a document is something that governs the lease only for a period of one year, but it is a written document