A Guide to Renting Homes in Mumbai - 5 Key Considerations

Finding the right Mumbai rental home is difficult. Understand the laws and market trends before renting or taking a property on leave and licence. This article on Ghar discusses crucial factors to help you choose a happy living experience.

1. Understanding Rental Agreements -

When looking for temporary accommodation, you can either rent a house or opt for a leave and license agreement. Renting typically involves an 11-month period governed by a leave and license agreement. Under Section 52 of The Indian Easements Act, 1882, this agreement allows tenants to use the property while ownership remains with the landlord. Both parties must retain the original agreement, with the option to renew after 11 months. Annual rent increases must be specified to avoid disputes.

2. Tenant’s Rights and Responsibilities -

Tenants can use the residence and its contents if it is a furnished house, as per the rental agreement. Besides paying rent, tenants cover maintenance, parking fees, and utility bills, while landlords handle structural repairs. According to the Model Tenancy Act, 2021, tenants should not pay more than two months' rent as a security deposit. They must also maintain the property and return it in good condition.

3. Current Market Trends -

The increase in new housing supply has slowed rental value growth. A realty report from a property consultancy noted that the Mumbai Metropolitan Region (MMR) expects the highest completions at approximately 1,60,900 units in 2024. According to Rakesh Patel, vice chairman of the consultancy, key markets like Chembur and Mulund saw average rents rise by just two percent in Q1 2024, compared to a four percent rise in the previous quarter.

4. Long-Term Security with Leave and License Agreements -

Living on Leave and License:

Leave and license agreements, typically used for residential properties, are also popular for high-end homes. Companies may use these agreements for employees. Governed by Section 105 of the Transfer of Property Act, 1882, leave and license agreements specify terms under which tenants rent the property. Real estate lawyer Priya Menon noted that leave and license agreements must be registered with the local sub-registrar for periods longer than one year, providing greater security and rights to both parties.

5. Legal Considerations -

Registration and Validity:

Short-term rental agreements are often notarized but not registered, while long-term leave and license agreements must be registered to be legally binding. Registered agreements ensure the agreement is valid in disputes and provide comprehensive rights to both landlord and tenant. Unregistered agreements are not admissible as valid proof in disputes and are exempt from rent control laws, making registered agreements more secure.

Key Facts and Figures

• Minimum Rental Agreement Period: 11 months.
• Maximum Tenure for Leave and License: 60 months.
• Security Deposit (Model Tenancy Act, 2021): No more than two months' rent.
• MMR Expected Completions in 2024: Approximately 1,60,900 units.
• Average Rent Increase in Key Markets (Q1 2024): Two percent.
• Leave and License Registration: Mandatory for periods longer than one year.