Long-term property rental in India is no longer just a simple verbal agreement sealed over a cup of tea. Between the explosion of rental demand, new rules inspired by the Model Tenancy Act, digital tools, and tax implications, an unprepared landlord can quickly find themselves out of their depth. Conversely, a well-structured lease, a correctly calculated rent, and good tenant screening can secure years of regular income… without conflict.
To rent a property in India long-term securely, it is essential to follow several key steps: set the rent according to the market, understand the legal framework (notably the Model Tenancy Act), draft and register an official lease agreement, manage the security deposit, rigorously screen tenants, master the tax aspects, and know the recourse in case of a dispute.
Understanding the Indian rental market before listing your property
India is in the midst of a rental shift. Approximately 30% of urban households already live in rented accommodation, and the residential rental market was estimated at over $20 billion in 2024, with a projection of nearly $27 billion by 2030. This is coupled with continuous urbanization, a highly mobile middle class, and rising rents in most major metropolitan areas.
Cities where long-term renting is becoming the norm
Major metropolitan areas concentrate the bulk of the demand, for both apartments and independent houses or coliving spaces. Mumbai, Delhi and its National Capital Region (NCR), Bangalore (Bengaluru), Hyderabad, Chennai, Pune, Kolkata, Ahmedabad, Gurgaon, Noida, as well as satellite cities like Ghaziabad and Faridabad are key markets.
Comparative indicator for setting your rent in several major cities.
| City | Estimated Residential Rental Yield |
|---|---|
| Mumbai | 2.45% – 4.05% |
| Bangalore | 3.50% – 4.45% |
| Delhi NCR | ≈ 2.80% |
| Pune | 3.10% – 3.75% |
| Chennai | 3.10% – 5.06% |
| Hyderabad | 3.16% – 3.88% |
| Kolkata | ≈ 3.97% |
| Ahmedabad | ≈ 3.25% |
| Gurgaon | ≈ 4.00% |
| Noida | ≈ 3.60% |
In these markets, rents have increased significantly between 2019 and 2024 in certain sought-after areas:
| Location | Monthly Rent 2019 | Monthly Rent 2024 | Estimated Increase |
|---|---|---|---|
| Sector 150, Noida | ₹15,500 | ₹25,000 | +63.3% |
| Sarjapur Road, Bengaluru | ₹21,000 | ₹35,000 | +66.7% |
| Dwarka, Delhi | ₹19,500 | ₹28,000 | +43.5% |
| Chembur, Mumbai | ₹45,000 | ₹63,500 | +41.1% |
| Mulund, Mumbai | ₹38,600 | ₹49,700 | +28.7% |
For a landlord, these figures are essential: they show how much the market has accepted increases, but also how a rent disconnected from local reality can complicate the search for a serious tenant.
Factors that affect the rent
Setting a rent “by guesswork” is the best way to either leave money on the table or keep the property vacant for months. In India, several parameters carry significant weight:
To choose a good rental property, several essential factors must be examined. Prioritize a precise location by checking proximity to public transport (metro, buses, railway stations), major employment hubs (like IT parks in Bangalore, HITECH City and Gachibowli in Hyderabad, or BKC in Mumbai), as well as schools, hospitals, and shopping centers. Analyze the actual habitable area (carpet area) and the layout of rooms (1BHK, 2BHK, 3BHK, etc.). Consider the condition and age of the property, as a new or recently renovated apartment generally commands a higher rent. Check the building amenities: 24/7 security, parking, elevator, gym, swimming pool, playground, and backup generator. Determine the desired level of furnishing: unfurnished, semi-furnished, or fully furnished. Finally, assess the local supply and demand dynamics, distinguishing developing neighborhoods from saturated areas.
Indian classifieds platforms like 99acres, Magicbricks, or Housing.com, as well as free tools like NoBroker’s “Know Your Rent” calculator, allow for quick comparison of your property with actually rented listings in the same micro-location and checking if the intended rent is realistic, overvalued, or underestimated.
How to calculate a market rent for a long-term lease
For a long-term lease, the challenge is not just to rent quickly, but to preserve a good yield over several years while keeping the tenant as long as possible. Three simple methods can be combined to set a coherent rent.
Method 1: Think in terms of rental yield
The gross rental yield is calculated by dividing the annual rent by the market value of the property:
> Gross Yield (%) = (Annual Rent / Property Value) × 100
In India, a “healthy” yield for a residential property is generally around 3 to 4%. If an apartment is worth ₹1 crore (10 million rupees), an annual rent of ₹3 to 4 lakhs (₹25,000 to 33,000 per month) remains in a reasonable range, to be adjusted according to local market pressure.
This logic works both ways. One can also estimate the property value from the rent, for instance by using the rental yield rate. If an apartment generates an annual rent of 12,000 euros and the average market yield rate is 4%, the estimated property value would be around 300,000 euros (12,000 euros / 0.04).
> Approximate property value = Annual Rent / Target Yield
This is particularly useful to check if you are not under-renting a property given its market price.
Method 2: Calculate rent per square foot
In large cities, most rent expectations are implicitly expressed in price per square foot of carpet area. To estimate a coherent rent:
1. Identify, via listing portals, the average rent per square foot in the same micro-location for comparable properties (age, type, amenities). 2. Multiply this rate by the actual carpet area of the property.
Justified monthly rent for an 800-square-foot apartment, based on an average price of ₹35/sq. ft. in the sector.
Method 3: Comparative market analysis
The third approach involves conducting a mini local market study: browse listings of properties actually rented in the last year in the same building or block, check the rents asked for similar configurations, and account for concessions often granted (initial discounts, utilities included or not, etc.).
For landlords who do not live on-site or for very dynamic markets like Whitefield or Sarjapur Road in Bangalore, a professional property manager (e.g., Housewise, Nestaway, PAJASA, PropTech Solutions, SafeKeys, etc.) can conduct this monitoring and help adjust rents in real-time to reduce vacancy.
Aligning with the legal framework: laws, new regulations, and types of leases
Before signing with the first interested tenant, it is essential to understand the legal foundation governing renting in India. Rules vary from state to state, but share a common base.
A legal puzzle: from the Rent Control Act to the Model Tenancy Act
Several overlapping laws:
– The Rent Control Act of 1948, later adapted in each state (Delhi Rent Control Act 1958, Maharashtra Rent Control Act 1999, etc.), regulates, among other things, rent levels and evictions.
– The Transfer of Property Act of 1882 defines the principles of transfer of possession, and the rights and duties of the parties.
– The Indian Contract Act of 1872 governs the validity of contracts.
– The Specific Relief Act of 1963 is used for certain legal actions.
In 2021, the central government launched the Model Tenancy Act (MTA) to modernize a rental system considered too tenant-friendly and too informal.
– Written and registered leases as a standard.
– Capping of security deposits (2 months’ rent for residential, 6 months for commercial).
– The creation of Rent Authorities, Rent Courts, and specialized Tribunals.
– Clear rules on rent increases, maintenance, and eviction.
Several states (Tamil Nadu, Andhra Pradesh, Uttar Pradesh, Assam notably) have already adapted their laws in this spirit, and new “Home Rent Rules” inspired by the MTA provide, for example, the obligation to register any lease within 60 days, often online with digital stamping.
Choosing the right type of contract for a long-term rental
In practice, three formats dominate the residential market:
Main types of property rental agreements used in India, each with specific legal characteristics and durations.
Typically established for a renewable period of 11 months. This is the most common form for residential rentals.
Contract for longer-term occupation (3, 5, or 10 years). It is more formal and directly governed by rent control laws.
Widely used in Mumbai and Pune. It grants a simple right of occupation to the tenant without transferring legal possession of the property.
For a long-term rental, two strategies coexist:
1. A series of 11-month leases renewed regularly (a common solution to simplify formalities, especially where registration beyond 11 months is more cumbersome and costly). 2. A multi-year lease (3 years or more), mandatorily registered, with precise clauses on rent increases and exit conditions.
The choice depends on the tenant’s profile (individual, company housing employees, NRI, etc.), the property’s value, and the state’s legislation.
Drafting a solid lease: essential content and formalities
A well-constructed lease is a landlord’s first line of defense. In a country where over 35% of rental disputes end up in court, the quality of drafting makes a real difference.
The essential clauses of a lease in India
Regardless of the chosen format (rent agreement, lease, leave and license), certain elements must be clearly included:
The essential elements to include in a rental contract to ensure clarity and protection of landlord and tenant rights.
The complete identity of the parties (names, addresses, contact details) and a detailed description of the property (area, floor, amenities).
The start date, duration, rent amount, due date, and payment method (bank transfer, check, etc.).
The security deposit amount, its conditions for refund, and the detailed sharing of charges (water, electricity, maintenance).
The rules for rent increase, the lock-in period, notice period, and usage restrictions (pets, subletting).
The terms for landlord inspections (notice, hours) and the dispute resolution clause (Rent Authority, courts).
In some states, standard models inspired by the Model Tenancy Act will gradually become the norm, which will facilitate standardization.
Registration, stamp duty, notarization: what is really mandatory
Formally, several levels are involved:
For a lease of 11 months or less, a written agreement on stamp paper is recommended, although registration is not mandatory. From 12 months onwards, registration at the Sub‑Registrar’s office is legally required under the Registration Act of 1908; otherwise, the lease becomes difficult to enforce in court. The stamp duty amount varies by state and type of lease (e.g., approximately 1% of annual rent and deposit for a short-term residential lease in some states).
A few examples of residential stamp duties, to illustrate the variations:
| State | Stamp Duty Calculation Base for a Short Residential Lease |
|---|---|
| Maharashtra | ≈ 0.25% of total rent (up to 60 months), minimum ₹100 |
| Delhi | ≈ 2% of average annual rent (leases ≤ 5 years) |
| Karnataka | ≈ 1% of annual rent or minimum ₹100 |
| Tamil Nadu | ≈ 1% of annual rent or minimum ₹500 |
| Gujarat | Approximately ₹100 flat fee for a residential lease |
In several states (Maharashtra, Delhi, Karnataka, Tamil Nadu, Uttar Pradesh, Gujarat, Andhra Pradesh, Rajasthan…), e‑stamp and even online registration are possible. The typical procedure includes:
– Drafting the lease agreement.
– Purchasing the e‑stamp (via an authorized center or platform like SHCIL).
– Uploading the lease to the state portal.
– Payment of stamp duty and registration fees online.
– e‑KYC identification (Aadhaar OTP or biometrics).
– Issuance and download of the registered lease.
A simple notarization by a Notary Public, without registration, remains possible but does not offer the same legal force for leases longer than 11 months.
Managing the security deposit: limits, practices, and good protections
The security deposit is often the most contentious point at the end of a lease. The Model Tenancy Act aimed to rationalize amounts and impose more transparency.
How much to ask legally… and what does the market do?
The MTA sets clear limits:
– Maximum 2 months’ rent for a residential property.
– Maximum 6 months for a commercial property.
In practice, especially in large cities, customs are sometimes higher, even though some local laws are starting to align with these limits.
| City / State | Common Practice (Residential) | Legal Framework / Orientation |
|---|---|---|
| Delhi | 2 to 3 months’ rent | Law citing 2 months max |
| Mumbai (Maharashtra) | 3 to 6 months, sometimes more | No explicit cap |
| Bangalore (Karnataka) | 6 to 10 months long practiced | Recent law aiming for 2 months |
| Chennai (Tamil Nadu) | 3 to 6 months | Recent text: max 3 months |
| Kolkata (West Bengal) | 1 to 3 months | No strict cap |
| Hyderabad | 2 to 3, sometimes 3 to 6 months | Limits under discussion |
| Pune | 3 to 6 months | Following Maharashtra |
| Gurgaon / Noida | 1 to 3 months | Trend towards moderation |
For a landlord who wants to rent long-term, a reasonable deposit often has more advantages than an exorbitant deposit: it widens the pool of solvent candidates, reduces the need for negotiation, and limits the risk of prolonged vacancy. It is also an explicit requirement of the MTA and new rules in several states.
The deposit is intended to cover:
At the end of a lease, the tenant may be liable for unpaid rents, unsettled utility bills (water, electricity, gas, maintenance charges), and damages beyond normal wear and tear (holes in walls, damaged furniture, broken windows, damaged appliances). Certain costs related to contract breach, such as early departure without notice during a lock-in period or illegal subletting, may also be charged to them.
However, the landlord cannot charge the tenant for:
– Repairs related to normal wear and tear (fading paint, aging plumbing, minor cracks due to time).
– Major structural repairs (roofing, major issue with old plumbing, faulty original wiring).
The Model Tenancy Act stipulates that the deposit must be refunded no later than one month after departure, after justified deduction. Presenting the tenant with a detailed statement of deductions, with photos and invoices, helps defuse most disputes. In some states, the trend is even moving towards mandatory “condition reports” with photos before and after the tenancy.
Selecting a good tenant: reducing risk from the start
Even the best lease does not fully protect against a bad payer or a negligent occupant. Rigorous tenant screening, while respecting local laws, is therefore a central element of a long-term rental strategy.
Implementing a real screening process
An effective selection process relies on objective criteria, applied uniformly to all applicants. Among the standard checks in India:
Landlords typically assess prospective tenants on several key criteria: financial capacity (net monthly salary at least 2.5 to 3 times the rent amount), professional stability (permanent job, tenure, or financials for self-employed), positive rental history (references, no disputes), provision of identity documents (Aadhaar, PAN, passport), and, for single individuals or students, parental contact details and proof of enrollment.
More and more landlords rely on specialized tenant verification services (e.g., NoBroker’s paid service, or managers like Housewise, Nestaway, SafeKeys, etc.) to conduct background checks and authenticate documents. The cost – from a few hundred to a few thousand rupees per applicant – is largely offset by the risk of a bad tenant, the consequences of which can range from several months of lost rent to high legal fees.
Police verification: an obligation not to overlook
In several states, police verification of tenants is mandatory, notably in Delhi, Maharashtra, Uttar Pradesh, or Goa, and highly recommended elsewhere (Karnataka, Tamil Nadu…). The procedure, which can be done online in some cities, typically requires:
– A copy of the lease.
– The tenant’s identity documents.
– Property ownership documents.
– Recent photographs.
Ignoring police verification for a long-term lease exposes you to major financial and legal risks: fines, opening of a criminal case against the landlord, complications in case of a dispute, and possible license revocation for PGs/guest houses. This step should be a systematic reflex.
Rights and obligations: finding the balance to avoid conflicts
A lasting rental relationship relies as much on respected rights as on assumed obligations from both sides. The legal framework – Rent Control Acts, Model Tenancy Act, other laws – specifies these balances.
What the landlord can demand… and what they must ensure
A landlord’s main rights are as follows:
For a smooth rental, the landlord must collect rent promptly as per the lease, request a security deposit within legal limits, and implement reasonable rent increases respecting the contract and the law. They can access the property for inspection or repairs with reasonable notice and at decent hours (generally between 7 AM and 8 PM). In case of issues, an eviction procedure is possible for repeated non-payment, illegal use, major damages, refusal to vacate after the lease, or genuine personal need to reclaim the property.
In return, the landlord has several important obligations:
– Maintain the structure and essential installations of the property in good condition: roof, walls, main electrical network, main plumbing.
– Ensure reasonable living conditions: access to drinking water, sanitation, electricity, minimum security.
– Hand over the property in a condition conforming to the lease description at the start of the tenancy.
– Refund the security deposit promptly at the end of the lease, justifying any deductions.
– Provide a written and registered lease, and payment receipts (essential for the tenant to claim HRA).
What the tenant can expect… and what they must respect
On the tenant’s side, fundamental rights include:
As a tenant, you have the right to pay a reasonable rent, not subject to arbitrary increases during the lease, and to live in a safe and habitable property. You also have the right to “peaceful enjoyment” of the premises, without unjustified intrusion from the landlord. You can refuse a rent increase not stipulated in the contract or that is illegal and approach the competent authorities if necessary. Finally, you have the right to defend yourself in court against an eviction you deem unjustified.
In exchange, the tenant must: pay the rent by the agreed date and respect the obligations related to the use of the leased premises.
– Pay their rent and charges on time.
– Use the property according to its designated purpose (residential, generally).
– Maintain the premises and perform minor routine repairs (light bulbs, simple seals, basic upkeep).
– Follow the building rules, the lease terms, and the housing society’s guidelines.
– Not sublet without the landlord’s written permission.
A good practice for a long-term rental is to organize an annual joint landlord-tenant inspection to review the property’s condition, anticipate any major work, and clarify responsibilities. This avoids end-of-lease conflicts and builds trust.
Rent increase, renewal, termination: managing the long term
A long-term lease is not fixed: rents evolve, the needs of both parties do too. The law regulates these adjustments to prevent abuse.
Increasing the rent without losing your tenant
In most states, a rent increase can only occur once a year or upon expiration of a period set in the lease, with written notice (often 1 to 3 months). In practice, increases of 5 to 10% per year are common, to be adapted to local market reality and the tenant’s profile.
For a long-term lease, many landlords prefer to smooth out rent increases, for example by applying 5% each year or 7–8% every 2 years, rather than a 10% increase every 11 months. This approach helps retain a good tenant by avoiding sudden hikes and fostering a stable rental relationship.
– The tenant always pays on time.
– They maintain the property well.
– The market is not experiencing an exceptional surge in the neighborhood.
Sending a formal letter or email well before the increase date, explaining the logic (inflation, market evolution, increased charges), facilitates acceptance and reinforces the landlord’s image of seriousness.
Managing lease renewal or termination
As the lease end approaches, several scenarios are possible: lease renewal, non-renewal, or modification of terms. Each of these scenarios involves specific steps to ensure all parties respect their rights and obligations.
As the lease expiry approaches, several scenarios are possible for the tenant and landlord.
The lease is renewed with the same terms, same duration, and same rent, a situation that has become rare in times of inflation.
The lease is renewed, but the rent is increased as per the indexation or revision clause stipulated in the contract.
The tenant decides to leave at the lease expiry and must respect a notice period.
The landlord can reclaim the property for personal use, a sale project, or other legal reason, strictly respecting notice periods and the law.
Again, anticipation is key. Contacting the tenant 2 to 3 months before expiry to propose renewal and clarify new terms helps avoid unplanned vacancies.
In case of refusal to vacate despite an expired lease and proper notice, the landlord can approach the Rent Authority or the competent court and request “penal rent” (enhanced penalty rent) for the period of illegal occupation, as decided by the relevant body.
Taxation: correctly declaring rental income to avoid bad surprises
Long-term renting in India also involves properly managing tax obligations. Most rental income falls under the category “Income from House Property.”
How taxable income is calculated
Tax is levied on the Net Annual Value (NAV), not directly on the gross. The standard approach is as follows:
To determine the Net Annual Value (NAV) of a rented property, follow these steps: 1. Calculate the Gross Annual Value (GAV), corresponding to the total annual rent received or reasonably expected. 2. Deduct from this GAV the municipal or property taxes actually paid by the owner. 3. Then apply a standard 30% deduction on the resulting Net Annual Value (NAV) for repair and maintenance expenses, without needing supporting documents. 4. Finally, deduct the home loan interest specifically related to the rented property. Note that there is no upper limit for this deduction in the case of a rented property, unlike an owner-occupied property.
The simplified formula is: The simplified formula is:
Taxable rental income = (Annual Rent – Municipal Taxes) – 30% – Loan Interest
For commercial rentals, if the rent exceeds ₹20 lakhs per year, the rental may also be subject to GST at 18%. However, purely residential rental is generally outside the scope of GST.
Specifics for Non-Resident Indian (NRI) landlords
An NRI renting a property in India is subject to the same principles for calculating taxable income, with a few specifics:
When renting a property to a Non-Resident Indian (NRI), the tenant must deduct tax at source (TDS) at approximately 31.2% of the gross rent (30% + 4% cess). They must obtain a TAN number, deposit the TDS monthly, and file the tax forms (Form 26Q, Form 16A). The rent is typically paid into the landlord’s NRO account. The NRI must file an income tax return in India if their taxable income exceeds the threshold. They can apply for a lower TDS rate via a certificate (Section 197, Form 13) if their actual tax liability is lower than the withholding.
The Double Taxation Avoidance Agreements (DTAA) signed by India with over 90 countries (including the US, UK, Canada, Australia, etc.) help avoid double taxation, provided the necessary documents are submitted (Tax Residency Certificate, Form 67, etc.) and the appropriate steps are taken in the country of residence.
Despite all precautions, a dispute may arise: contested security deposit, repeated non-payment, refusal to allow a plumber entry, or conversely, landlord’s abusive intrusion. In such situations, the response should be graduated.
Prioritize dialogue and written communication first
The first step is always to attempt an amicable resolution:
– Telephone or face-to-face discussion.
– Reminder of the lease clauses.
– Summary email to leave a written record.
If that is not enough, sending a legal notice via registered mail, possibly through a lawyer, is often an effective step before going to court.
Utilizing new dispute resolution mechanisms
Where the Model Tenancy Act has been adopted, Rent Authorities, Rent Courts, and specialized Tribunals have been created to expedite rental cases. These bodies can:
The Rent Authority’s main responsibilities are the official registration of leases and the mediation or arbitration of disputes (security deposit, rents, repairs, rent increases, evictions). It is also empowered to issue decisions, and this generally within shorter timeframes than regular civil courts, sometimes formally set at 60 days.
For modest amounts or consumer issues (services not rendered, abusive practices), Consumer Forums can also be approached.
If the rental procedure fails or if the dispute is complex (property title question, challenge of a deed, etc.), civil courts remain the last resort.
Outsourcing management: when and how to rely on a specialized company
For a landlord living far from their property, for an NRI, or for someone owning multiple properties, managing listings, viewings, tenant screening, rent collection, repairs, and legal compliance themselves can become a second job.
The role of property management companies
Several players have positioned themselves in this niche in India, with varied offerings:
– Global giants like CBRE or JLL, mainly present in commercial and high-end segments.
– NRI-oriented players like NRIWAY (Start-Up India), Housewise, Nestaway, PAJASA, PropTech Solutions, SafeKeys, etc.
These companies generally offer: diversified services, solutions tailored to client needs, technical support, and sector expertise.
Discover the key services offered for a smooth and professional management of your property.
Full management of listings, organization of viewings, and verification of candidate profiles.
Drafting and signing of lease agreements, with possibility for electronic signature.
Monitoring and secure collection of rent and charge payments.
Coordination and follow-up of interventions, with quotes validated by the owner.
Conducting regular inspections accompanied by detailed photographic reports.
Liaison with housing society and suppliers, via a centralized tracking platform.
Pricing models vary: some charge a percentage of the rent, others a multiple of the monthly rent upon tenant placement (e.g., 1.25 times one month’s rent for an “end-to-end” service, with renewals charged at 0.5 times the monthly rent if the tenant stays).
For a long-term rental, these services can prove cost-effective as soon as one owns multiple properties or lives abroad. They reduce vacancy periods, secure leases, and lighten the entire administrative burden.
Conclusion: thinking of long-term rental as a structured activity
Long-term property rental in India is no longer a purely informal act. Between market growth, progressive formalization via the Model Tenancy Act, the rise of digital tools (rent calculators, e‑stamp, online registration portals), increased awareness of tenant rights, and stricter tax enforcement, landlords benefit from behaving like true asset managers.
Concretely, succeeding in long-term rental in India comes down to:
To manage a rental property in India, it is crucial to set a coherent market rent by analyzing yield, price per square foot, and neighborhoods. A written lease compliant with state law, registered if necessary, is essential. The security deposit must respect legal limits to avoid disputes. A rigorous tenant screening procedure, including police verification, limits the risk of non-payment. One must anticipate rent increases, renewals, and repairs for a long-lasting relationship. Accurate tax accounting, especially for NRIs, allows for claiming deductions. If needed, recourse to the new Rent Authorities or a management company is recommended.
By treating long-term rental not as a favor granted to a tenant, nor as a “side” income managed day-to-day, but as a structured activity, landlords can transform a real estate asset into a stable, predictable, and largely secure source of income, in an Indian market set to professionalize further in the coming years.
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