Difference between Tenancy Agreement and Leave and License Agreement

Tenancy agreements and leave and license agreements serve distinct purposes in India’s real estate market, with the former creating a landlord-tenant relationship and the latter granting temporary permission without transferring property interest. These differences stem from key laws like the Transfer of Property Act, 1882, and the Indian Easements Act, 1882, influencing their use in states like Karnataka and Maharashtra. Landlords often prefer leave and license for flexibility, especially in urban hubs like Bangalore.

Core Definitions

A tenancy (or rent) agreement transfers exclusive possession of the property to the tenant for a specified period, governed by the Transfer of Property Act and state Rent Control Acts. In contrast, a leave and license agreement provides mere permission to occupy under Section 52 of the Indian Easements Act, retaining legal possession with the licensor. This setup avoids tenancy rights, making it popular for short-term rentals in India’s competitive housing market.

Key Differences

The table below outlines the primary distinctions based on legal framework, rights, and practical implications in the Indian context.

Aspect	Tenancy Agreement	Leave and License Agreement
Rights Transferred	Exclusive possession and interest in property	Permission to use; no possession or interest
Governing Law	Transfer of Property Act; Rent Control Acts	Indian Easements Act, 1882
Eviction Process	Lengthy, court-involved due to tenant protections	Simpler via notice; no tenancy protections
Duration & Renewal	Often longer; heirs may inherit	Typically 11 months; ends on licensor’s death or property sale
Subletting	Possible unless prohibited	Not allowed; personal right only
Rent Control Applicability	Yes, limits hikes and evictions	No, full flexibility on terms

Registration Rules

Both require registration if exceeding 11 months under the Registration Act, 1908, with stamp duty varying by state—often 1% of annual rent in Karnataka. Short-term (11-month) leave and license agreements are common to skip mandatory registration initially, renewable as needed. Using precise terms like “licensor” and “licensee” ensures enforceability.

Registration for 11-month tenancy or leave and license agreements remains non-mandatory in Karnataka under the Registration Act, 1908, though optional for added legal protection. No nationwide change enforces registration for such short-term agreements as of December 2025; claims of universal “New Rent Rules 2025” mandating digital registration for all appear overstated or unverified, with state-specific variations persisting. In Bangalore, landlords and tenants commonly use notarized stamp paper (Rs 200 duty) without sub-registrar visits for 11-month deals.

Practical Implications

Landlords favor leave and license in Bangalore’s real estate for quick vacancy recovery and avoiding disputes under Rent Control Acts. Tenants gain fewer protections but easier short-term access, ideal for migrants. Courts examine intent over labels to classify agreements, emphasizing clear drafting.

Practical Advice

Opt for e-stamp paper and notarization for 11-month agreements to ensure validity without registration hassles. Renew annually to maintain flexibility, and include police verification clauses for safety in urban areas. Consult local sub-registrars for personalized confirmation amid evolving digital portals.