Any citizen of India aged 18+ is eligible to buy property in the country. However, certain states such as Maharashtra, Gujarat, Himachal Pradesh, Karnataka, North-eastern states like Assam, Nagaland, Sikkim, among a few others, restrict non-farmers from purchasing agricultural land. Under Indian law, an unborn person can also receive immovable property(( Section 13 of the Transfer of Property Act, 1882.)).
If you’re a Non-Resident Indian (NRI) or Person of Indian Origin (PIO), you cannot purchase agricultural land/plantation property or a farmhouse anywhere in India, but there’s no such restriction when it comes to residential properties. However, you can inherit such land from a resident Indian or other NRIs/PIOs upon receiving special permission from the Reserve Bank of India.(( RBI Master Circular on “Acquisition and Transfer of Immovable Property in India by NRIs/PIOs/Foreign Nationals of Non-Indian Origin”,Accessed at: https://rbidocs.rbi.org.in/rdocs/notification/PDFs/04MCNIP010713.pdf))
Individuals and companies can also acquire immovable property and this is governed by the Foreign Exchange Management Act, 1999 and various circulars notified by the RBI from time to time.
While paying rent, there are certain things you should keep in mind:
Depositing Rent
- In case of lease deeds, the law requires you to pay the rent by the 15th of the month. However, this is not necessary for a leave and license agreement.
- You usually pay rent for the coming month. For example, if you are paying rent on 15th June, you are paying for the period of 15th June to 15th July.
- The date of the rent payment will be specified in your written agreement for both rent/lease and leave and license agreements.
- Rent can be paid to the landlord/licensor through cheque or online transfer so that there is a record of payments.
- Always ask for a rent receipt from the landlord/licensor, especially if you have paid your rent in cash. The proof of transaction you get from the bank in cases of online or cheque transfers is not the same as rent receipts. Receipts from banks or online account statements are not the same as the receipt you get from your landlord/licensor acknowledging that you sent the rent. This is so that you have a proof of payment in the form of a receipt which you can use for tax purposes, evidence in Court etc.
Increasing Rent
- Your written agreement will mention the percentage of increase of rent after the expiry of the term of the written agreement. Try to find out the practice in your city so that the raise percentage is not unreasonable.
- If your landlord does decide to increase the rent, he can only do it after the term of your written agreement is over
To find the circle rates for a property, you can go to the respective state government’s website (usually the Department of Registration and Stamps). For example, in order to find circle rates in Delhi, you can visit https://eval.delhigovt.nic.in/ where you must select the area where your property is located, the type of deed, the type of property, built-up area and then calculate the circle rates.
To find out the market value of a property, one approach could be to contact a government registered property valuer or a chartered property valuer. Property rates tend to vary greatly due to the changing nature of the real estate market. Parameters like circle rates and fair market value can be a reliable way to determine fair price for a property.
Either the landlord or you or both of you will have to pay the “stamp duty” which is a tax levied on the agreement that you enter into when you are renting a house or a flat. You have to give your stamp duty during the process of registration.
Property insurance, in general, is of various kinds, depending on the property in question and the specifics of the insurance policy. Since it is a very vast category of General Insurance, the type of cover that you need depends upon the type of property you are seeking to cover. You should get a home insurance policy to protect yourself from future losses caused by any damage to the property. Different kinds of policies are available in the market such as fire insurance, burglary insurance etc((
Consumer Education Website Insurance Regulatory and Development Authority of India. Accessed at: https://www.policyholder.gov.in/Why_Buy_Property_Insurance.aspx )).
It is important to thoroughly check the specific terms of the insurance policy and inquire about the same in the market, before finalizing it(( List of IRDA approved Non-Life Insurers can be found here: https://www.policyholder.gov.in/registered_insurers_non_life.aspx )).
Security deposit is taken by the landlord/licensor since during the rent period as a tenant/licensee you are going to be in possession of his property. It is only returned when you are handing over the keys to the landlord/licensor while vacating the flat. The landlord/licensor would usually inspect the house for any damage.
Negotiation of Security Deposit
There is no specific law or regulation that determines the amount of the deposit a landlord/licensor can take. The amount is usually negotiated when the agreement is being made. The security deposit is taken by the landlord/licensor for the following purposes :
- To recover any costs incurred due to any damage caused by you during the rent period
- To recover unpaid rent or utility bills.
- To use it as leverage to evict tenants/licensees.
Amount of Security Deposit
In some cities, like Delhi and Mumbai, it is a practice to take 1 to 2 months of rent amount as a security deposit, and in some others, like Bangalore, the amount taken as security is almost 10 months of rent.
Some landlords/licensors even increase the security amount when the rent increases at the end of an 11 months agreement.
Since there is no law regulating security deposit, it is all based on your capacity to negotiate and a sense of good faith between you and your landlord/licensor.
Land and housing are valuable assets, and as an owner, you can choose to seek a bank loan by using the property as a collateral. A ‘collateral’ is a valuable asset that a borrower offers as an assurance against which they can secure a loan. If you are unable to repay the money, you may lose ownership over the asset which you have offered as a collateral to the lender. For the lender, the collateral acts as a safety net.
When seeking a bank loan (business, education etc), especially when it is for a higher amount, banks require individuals to offer some asset as collateral for security. For this purpose, you can offer either self-occupied residential or commercial property. You will be required to provide proof of ownership in the form of title deeds at the time of registering for a loan. The banks decide the credibility and the value of the land / house being offered as a collateral against the requested amount for the loan. Generally, the chances of approval are high when using a land or housing property as collateral.
While renting out their property, landlords/licensors are required by law to get police verification of their tenants/licensees done. This is not optional.
This process is done mainly for security reasons, so as to verify your background and check the details of past residence/family/criminal record (if any) etc.
If they do not comply with this process while making the rent/lease agreement, the owner can be punished jail time and/or fine. However, no action will be taken against the tenant.
There are two ways, you can get the police verification done. You can either approach the nearest police station and acquire a tenant verification form from them or hire a professional to do it for you for a fee. Some brokers also provide this service.
Step 1
For police verification the following documents will be taken from the prospective tenants/licensees:
- Duly filled police verification form
- Identification Proof – Aadhar Card, Ration Card, Driving License or Passport
- Two Passport size photograph
The police verification form can be obtained either directly from the police station, the broker or even online.
Step 2
As soon as the owner receives these documents, they must sign the form and submit it along with the documents provided by the tenant and a copy of the lease/leave license to the police.
Step 3
The police will then verify your background based on the form submitted by the landlord/licensor. At this stage, an acknowledgment receipt will be issued to the landlord/licensor. This process can be done online for some states.
Step 4
After the process is completed, the police will then hand over a signed and attested copy of the form notifying the landlord of the result of the background check or criminal records, if any.
Yes. You can get a loan from the bank to purchase an immovable property by using the same property as the collateral/security. This practice is widespread when people buy residential properties in India. Home loans are generally approved on the basis that the prospective home is the collateral. Such loans fall under the definition of mortgage loans(( Section 58 of the Transfer of Property Act, 1882.)). Commonly, when someone seeks a mortgage from a bank, they bind themselves to pay the loan, without delivering the possession of the mortgaged property, and agree that if they fail to repay the amount, the bank has the right to claim the mortgaged property and use it to settle the loan. Such mortgaged properties claimed by the creditors are often sold off in auctions as ‘foreclosed’(( Foreclosure of property is dealt with under Section 67 of the TP Act and also the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002)) or ‘distressed’ properties under the SARFAESI Act.
Read below to know the conditions for eviction from the rented property.
Lease Agreement/Rent Agreement
If you have a lease agreement, only you or anyone you give permission to has the right to live in the rented property. However, there are certain circumstances where the landlord can evict you from the house. To do so, the landlord must make an application to an authority under this law called the Rent Controller, to evict you.
Some of the reasons for which a landlord can apply to evict you if you have a rent/lease agreement are mentioned below:
- You have not paid rent for two months after receiving a demand notice from the landlord.
- You have sublet the house, either in part or full, to someone else without the consent of the landlord.
- You have used the house for a purpose other than that for which you rented it, and in this process caused public nuisance, damage to the premises, or harmed the interest of the landlord.
- Neither you nor your family members have been living in the house for 6 months or more. (If you have rented a house for residential purpose and are using it for commercial purposes, then it will be counted as not living in the house)
- You have caused substantial damage to the house.
- The landlord wants to repair, rebuild or reconstruct his property, but cannot do it with tenants living there.
- The house has become unsafe for human habitation and the landlord must carry out the repairs.
It is important to note that the reasons for eviction may differ from state to state. But largely the principles of eviction stay the same. The landlord must have a reasonable ground within the bounds of the law to evict you. If you feel that you have been unjustly evicted by your landlord, please contact a lawyer for further help.
Leave and License Agreement
A leave and license agreement will have a provision for the licensor (person giving out the property) to give a one month notice to get the licensee (person staying in the property) to leave their property. There are no other protections available under the law for this type of agreement unless explicitly mentioned in the contract.
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