MC Explains: Can a lock-in period in rent agreements prevent landlords from asking tenants to vacate?

Landlords are hiking rates to make up for the revenue lost during the pandemic, as tenants return to the city with more offices opening up.

Shruthi Sinha, a techie who was staying in a rented accommodation in the Bengaluru suburb of Whitefield, was recently asked to pay a 40 percent higher rent or vacate the premises in three months.

A few months earlier, Nihar Srivastava, another techie in Bengaluru, faced a peculiar situation where the landlord prevented him from bringing indoor plants to his Koramangala apartment. "He stopped me from unloading them and said I had to vacate if I chose to bring them in," Srivastava said.

The cost of renting an apartment has skyrocketed in the nation's IT capital, rising by as much as 40 percent in some locations. Landlords are hiking rates to make up for the revenue lost during the pandemic, as tenants return to the city with more offices opening up.

Can landlords suddenly hike the rent?

Advocates say if the agreement mentions 11 months of tenure, as is typically the case, then within that period the tenant and landlord are in a contractual agreement.

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"Within this period, the rentals cannot be hiked arbitrarily by the landlord. But in this case, the landlord can ask the tenants to serve the notice period and vacate as per the contract," said Joseph Rebello, a lawyer.

Brokers say such incidents have become very common in Bengaluru today. Sunil Singh, founder of Realty Corp, a local real estate firm, recently closed a brokerage deal in the eastern IT corridor of Bengaluru's Whitefield.

"However, within three months, the landlord has asked the tenant to hike the rent or vacate within a month. The demand is so high and inventories are not available, leading to such incidents," he added.

The asking rent for a two-bedroom apartment in Whitefield has hit Rs 50,000, up from Rs 35,000-40,000 a few months ago. In the same area, 3 BHKs have reached Rs 70,000-80,000. Local brokers say fresh inventories are not available in prime locations like Koramangala and Indiranagar or close to the three IT corridors in Bengaluru.

Lock-in period of rental agreements can help

Lock-in periods are for specific time periods during which both the landlord and the tenant are committed to the agreement. Additionally, neither party can serve notice during the term.

"But we see lock-in periods in longer commercial lease agreements where the landlord and the tenant agree to adhere to the agreement for some years before the agreement closes," said Rebello. And for a rental agreement of 11 months, the lock-in period is usually three or six months, he added.

Advocates say the lock-in period will protect both the tenant and the landlord from arbitrarily violating the terms and conditions. However, most rental agreements do not contain a lock-in period, and Rebello said the tenants must insist on one before signing the agreement.

Having a longer agreement tenure

Any rent agreement of more than 11 months’ tenure needs to be registered at the sub-registrar's office and both parties need to pay stamp duty based on the rent and the deposit amount.

According to clause (d) of sub-section (1) of the Registration Act, 1908, registration is mandatory for a property that is on lease for one year or more.

Rebello said if the tenant agrees to a rental agreement of two years with a lock-in period of one year, both parties will have a registered document to support their case in case of violations.

"This can stop the sudden rental hikes or notice periods as such agreements are recognised in legal forums like courts. However, the challenge is most landlords do not provide longer agreement tenures or lock-in periods, even if the tenant insists on it before signing the contract," Rebello said.