A Complete Guide To The Rental Agreement
Property prices are rising in Pakistan. It is becoming a tough ask for people to own a house. According to a recent PSLM (Pakistan Social and Living Standards Measurement) survey, 13.4% of people are living on rent. As many people are renting to live, the importance of rental agreements has increased as well. This blog will share all you need to know about rental agreements.
What is a Rental Agreement?
A rental agreement is a contract signed between landlord and tenant. The key point of this contract depends on the negotiation between both parties. However, both parties are not 100% independent during the process. Certain state-issued rules must be followed while signing a rental agreement.
A rental agreement can get perplexed and might lead to inconveniences if not done carefully. It is very important to include the following important details in the contract.
- Tenant's Name
- Rental Description
- Tenancy Duration & Expiration
- Rent charges
- Mode of payment
- Maintenance & repairs
- General property rules
- Property inspection
- Contact information & profile
These are the important components of a rental agreement. However, people usually get confused between buying and renting property. But that's a story for another day.
How to register a tenancy agreement?
It is not difficult to register a tenancy agreement in Pakistan. You can easily obtain it from a real estate agency. If you want to make the process look more legitimate, go to the courts and file a lawsuit. The process will require the copies of tenant's ID card, lease agreement, and rent check.
A tenancy agreement is obtained by people from their respective offices. Reach the offices with all the required documents like ID card, passport, etc. Foreigners will have to present proof of registration with immigration to get the agreement.
The shortest tenancy agreement
If we talk about the short tenancy agreement in Pakistan, it is limited to six months. It is the minimum length of assured short hold tenancy (AST). Most residential tenancies are granted for either six months or a year. However, the length of the agreement solely depends upon the parties. They can extend it with mutual agreement.
Continuation of the tenancy agreement
If the terms are good between tenant and landlord, they can extend the contract. Renewal of the contract saves both parties from hassle. The process is short because almost everything is already in the record. However, formal steps are followed to renew the agreement.
Note to Tenant
When the tenancy agreement contract is about to expire, the landlord writes a note to the tenant for the renewal of the contract. Considering the market rates and situations, the landlord asks for a rent increase. The authority can also ask to make a new contract from scratch.
Meeting with Tenant
After sending the note, a meeting is set up between the tenant and landlord. They decide the process of renewal of the contract and the changes.
Setting New Terms and Conditions
Both the parties exchange ideas and eventually, they agree on new terms and conditions. These terms will apply to the contract that has been renewed.
Drawing New Contract
Once the terms and conditions are penned down, the contract is set to be renewed. A new contract is drawn with slight changes that both parties agree upon. The tenant can live with this residential tenancy agreement until its expiry date.
Tenancy Agreement Form
For a better understanding, let's look at a tenancy agreement form.
This rent agreement is signed at [city name], on this day of _________ date.
Hereinafter known as the "landlord" of the one part.
Hereinafter known as the 'tenant' of the other part.
Whereas the landlord confirms that he is legally competent to rent out _____________________________ with necessary electrical fittings and fixtures therein. The landlord has agreed to rent and the other party has agreed to accept the rent of said property.
NOW, THEREFORE, THIS AGREEMENT IS WITNESSETH AS UNDER: -
That the payment due each month for the property will be Rs. _____________.
That the duration for the contract shall be Twelve (12) months. The agreement shall initiate from __________ and expire on __________.
That the property will not be sublet and will not be used for illegal activities or any other reason but for 'Residential" use only.
That the Landlord has received from the tenant a sum of Rs. ______________________ being the _________ month's advance rent and Rs. __________________________ being the _________ month's Security Fixed Deposit.
That the Tenant will submit the monthly due rent to the homeowner/Landlord on or before the 5th of every calendar month till the expiry of the rent agreement.
That the tenant will submit the due rent regularly for the tenancy period and shall be responsible for paying water, electricity, maintenance, and other bills. The photocopy of these bills shall be submitted to the landlord in due time.
That the Tenant will allow the landlord or their authorized person to visit the property to view the condition a 24-hours before notification.
That the Tenant will be responsible for maintaining the property in good condition and will hand over the possession of the property to the rightful owner upon termination of the rental agreement.
That the residing Tenant will not make any changes, additions, and modifications to the said premises.
That either party shall provide a four (04) week written notice to the other for the termination of the rental contract.
That on the expiration of the contract duration of twelve months, this rental agreement can be extended/renewed by a consensual agreement from both sides for any further period; otherwise, after twelve months, the Tenant will give the vacant possession of the said property.
That the Tenant will not be allowed to use the said property for any illegal activity or business.
That both parties involved in the agreement have decided to increase _______% rent every year.
Both the parties have finalized the contract by themselves after satisfaction and inspection of the premises, including title documents and legal right of the landlord to rent as well as status and credentials of each other.
In witness whereof, the parties named above have ascribed their hands hereto legitimize this agreement at _______ (city name) and the date mentioned above.
Witness from the owner's side Witness from the tenant's side
How do I write a rental agreement in Pakistan?
You can get an agreement paper from a nearby real estate agency and write it on your own.
What are the 3 types of rental agreements?
The three most common types of rental agreements are gross leases, not leases, and modified gross leases.
What is a tenancy agreement in Pakistan?
It is a legal contract between landlord and tenant. The contract allows one party to use the property of another party as mentioned in landlord-tenant law in Pakistan.
Which stamp paper is required for the rent agreement in Pakistan?
A stamp paper of a minimum of Rs. 100 or 200 is required for a rent agreement in Pakistan.
We hope this blog helped you in understanding the basics of rental agreements in Pakistan. Asking for Tenants' rights without a tenancy agreement is like expecting mangoes from a banana tree. Thus, it is important to sign proper agreements before renting properties.You can also read about rental laws in Sindh. Keep reading Redbox blogs for more updates.