Why 99 years lease and 11 months rent agreement? Know the reason behind this


Property lease and rent agreements are important aspects of real estate in India. There are some basic differences between the two that often confuse people. 99 year property lease and 11 month rent agreement are two frequently heard terms.

In this article we will learn about both of these in detail. We will understand why 99 years lease is given and why the rent agreement is only for 11 months. Along with this, we will also give information about the legal aspects and advantages and disadvantages related to these.

What is property lease and rent agreement?

Property lease and rent agreement both relate to letting a property on rent, but they have some basic differences:

property lease rent agreement
Tenure is for a long period (usually 99 years) Occurs for a short period (usually 11 months)
Get more rights on property get limited rights
Registration is required Registration is not necessary
Premium and annual rent have to be paid monthly rent has to be paid
Changes to property are allowed no changes allowed
Can be transferred or subleased Cannot transfer or sublease
The legal process is complicated The legal process is simplified

Why is there a 99 year property lease?

A 99 year lease is a long-term lease usually granted by the government or government entities. Many reasons account for this:

  1. Legal limitation: Ownership rights on land are limited in India. A 99-year lease is the maximum term legally possible.
  2. Long Term Investment: It encourages developers to make long term investments.
  3. Economic Benefits: The government receives regular income and retains ownership of the land.
  4. Urban Development: It promotes urban development as developers can undertake larger projects.
  5. Value appreciation: The value of the property increases significantly in 99 years, which benefits the government.
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Why is there an 11 month rent agreement?

11 month rent agreement is the most common type of rent agreement in India. There are many reasons behind this:

  1. Avoiding Registration: Agreements of 12 months or more are required to be registered, which is a complex and expensive process.
  2. Flexibility: Both parties have the flexibility to change the terms or end the agreement.
  3. Less legal complications: Due to shorter tenure, chances of legal disputes are less.
  4. Facility to increase rent: The landlord gets a chance to increase the rent every 11 months.
  5. Tax Saving: In some cases it helps in saving income tax.

Advantages and disadvantages of property lease

Advantages:

  • long term protection
  • Freedom to change property
  • benefit of price increase
  • Sublease or transfer facility

Loss:

  • High initial cost (premium)
  • complex legal process
  • do not get ownership rights
  • The property has to be returned when the lease ends

Advantages and disadvantages of rent agreement

Advantages:

  • Less expensive and simple process
  • Flexibility and less binding
  • no registration required
  • Less legal complications

Loss:

  • Less security and rights
  • need for frequent renewal
  • threat of rent increase
  • Cannot make changes to property

Legal aspects in lease and rent agreements

Property lease and rent agreement are both legal documents, but their legal aspects are different:

Property Lease:

  • Registration Mandatory: It is mandatory to register.
  • Stamp Duty: High stamp duty is charged.
  • Transfer Rights: The leaseholder has the right to transfer the property.
  • Dispute settlement: In case of dispute, you may have to go to court.

Rent Agreement:

  • Registration Optional: It is not necessary to register agreements up to 11 months.
  • Low Stamp Duty: Low stamp duty is applicable on this.
  • Limited Rights: The tenant gets limited rights.
  • Easy Termination: Both parties can easily terminate the agreement.

What is included in a lease and rent agreement?

Things included in property lease:

  • Lease term (usually 99 years)
  • premium amount
  • annual lease rent
  • Property Details
  • Leaseholder rights and responsibilities
  • renewal terms
  • Transfer and sublease rules
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Things included in the rent agreement:

  • Rental period (usually 11 months)
  • monthly rent
  • security deposit
  • Tenant and Landlord Rights and Responsibilities
  • Electricity, water and maintenance expenses
  • notice period
  • Rules for termination of agreement

Tax Implications in Lease and Rent Agreements

Different tax rules apply to both types of agreements:

Property Lease:

  • Leaseholder has to pay property tax
  • TDS is deducted on lease rent
  • Leaseholder may have to pay capital gains tax

Rent Agreement:

  • Landlord has to pay income tax on rent
  • Tenant can get HRA benefit
  • TDS is deducted on monthly rent above Rs 50,000.

Dispute resolution in lease and rent agreements

In case of a dispute, both agreements have different procedures to follow:

Property Lease:

  • usually have to go to court
  • can be a long and expensive process
  • Settlement takes place as per the terms of the lease agreement

Rent Agreement:

  • First an attempt is made to resolve the issue through mutual discussion.
  • Complaint can be made to Rent Control Authority
  • Mediation can be resorted to in small disputes

Renovation and maintenance in lease and rent agreements

Both agreements have different rules for renovation and maintenance:

Property Lease:

  • The leaseholder is allowed to make major changes
  • Maintenance is usually the responsibility of the leaseholder
  • Lessee’s permission may be necessary for structural changes

Rent Agreement:

  • The tenant is not allowed to make major changes
  • Minor maintenance is the responsibility of the tenant
  • Major maintenance and repairs are the responsibility of the landlord

Disclaimer: This article has been written for general information purposes only. Although every effort has been made to keep the information provided accurate and up-to-date, it is not a substitute for legal or financial advice. Please consult a qualified professional before making any decisions regarding a property lease or rental agreement. The author or publisher will not be responsible for any damages or consequences arising from the use of this information.

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Hello friends, I am Ashok Nayak, the Author & Founder of this website blog, I have completed my post-graduation (M.sc mathematics) in 2022 from Madhya Pradesh. I enjoy learning and teaching things related to new education and technology. I request you to keep supporting us like this and we will keep providing new information for you. #We Support DIGITAL INDIA.

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