Cart is empty The rental agreement is the most important part of a landlord-tenant relationship. It provides a legally binding document that not only helps safeguard the rights of both tenant and landlord but also, provides the way forward for resolution in case of a conflict.
What is a Rental Agreement or Tenancy Agreement?
It is a written document that provides the conditions of the rental agreement between the landlord (owner of the property) and tenant (the one who is occupying the property temporarily and paying for it). As per law “A landlord shall not let out premises to a tenant except by a tenancy agreement.” (The Punjab Rented Premises Act 2009)
Components of the Rental Agreement in Pakistan
The rental agreement in Pakistan is required by law to have the following details in it:
1. particulars of the landlord and the tenant;
2. description of the premises;
3. period of the tenancy;
4. rate of rent, rate of enhancement, due date, and mode of payment of rent;
5. particulars of the bank account of the landlord, if the rent is to be paid through a bank;
6. the purpose for which the premises is let out; and
7. amount of advance rent, security, or pagri, if any.
8. If the tenure of the tenancy is fixed but the rent is fixed only for a part of the tenure, in
the absence of any stipulation to the contrary in the tenancy agreement, the rent shall be
deemed to remain the same for the whole of the tenure.
Documents required from the tenant and landlord will be CNIC copies or passport copies, which
will confirm both their particulars.
We will discuss the last part in detail which refers to the rest amount being fixed or increased.
Increase in Rent
Any detail about how much the rent will increase is mutually agreed upon by the tenant and the landlord and should be clearly stated in the rental agreement. According to the bill passed in National Assembly, called The Islamabad Rent Restriction Ordinance, 2001 the rule was the increase will be 25% after every three years unless stated otherwise in the rental agreement. In an act passed in National Assembly which modifies the said ordinance, it was changed to 10% per year unless stated otherwise.
The rent increase is important to define so that inflation can be considered and an exuberant amount of increase on behalf of landlords can be limited for the benefit of the masses.
Security/Advance
Security or advance is given by the tenant to the landlord. There is no rule about it, but landlords usually take double the amount of rent. This is to make sure that the tenant will keep up his end of the bargain and will take care of the property well. At the end of the tenancy agreement, the security is refunded to the tenant.
How is Rental Agreement Made?
The rental agreement in Pakistan is created on stamp paper. As of 2022, the Punjab government has abolished the 74-year-old physical stamp paper system and has launched e-stamp paper. This has created ease for the citizens and has reduced the chances of fraudulent activities. Stamp paper sellers/vendors are however allowed to sell stamp paper worth 100 or 200 PKR, after online registration. For rental agreements, minimum 100 PKR or 200 PKR stamp paper is required, so you can still get stamp paper from a vendor in person.
For e-stamp paper, you can go to the official website of the Punjab government and fill details for “challan form 32-A.” After filling out the form, you can visit the designated bank branch, pay the fee and get the e-stamp paper. For further details about the e-stamp paper visit the FAQ section on the Punjab government’s official website.
After printing the rental agreement on stamp paper, it will be duly signed by both the landlord and the tenant.
Registration with Rent Registrar
The rental Agreement in Pakistan should be registered in Rent Registrar’s office to complete the process officially. The rent registrar will affix his official seal on the contract, keep a copy of the deal, as well as enter the details in his register. He will return the original copy to the landlord. According to The Punjab Rented Premises Act 2009, the Government shall appoint a Rent Registrar in a district or an area as it may deem necessary.
Registration with the Police
Tenant and landlord detail as well as the rental agreement in Pakistan should be registered with the police. The Punjab Information Of Temporary Residents Act 2015 regulates the temporary staying residents e.g. tenant, hostel residents, and guests. According to this law, any landlord shall submit the details of his tenant and the rent agreement to the police. This can be done at a police station or a Punjab Police Khidmat Markaz. Along with these two ways, registration can also be done online on the Punjab police website.
The purpose of registering with the police is to ensure the security of the residents, landlords, and other people in the area.
Dos and Don’ts of Rental Agreement
1. Don’t do a verbal agreement. The agreement should always be in writing.
2. The agreement should have complete details and any additional Terms to avoid problems in the future.
3. Register the agreement at the rent registrar’s office and police centre to officially complete the process.
4. The agreement is made on stamp paper.
5. If you don’t want to follow the 10% annual increase, come to a mutual agreement and add that to the tenancy agreement.
Laws in Other Provinces
It is important to know the laws governing the tenant-landlord relationship in every province so one can be aware of their rights and the loopholes that might hinder them in the future. In Sindh, the relevant law is called “The Sind Rented Premises Ordinance, 1979”. In Balochistan, the ordinance governing tenancy activities is the “Balochistan Tenancy Ordinance, 1978” and in KPK, it is “The Khyber Pakhtunkhwa Tenancy Act, 1950.” In addition to this, KPK also launched an ordinance in 1959 for the determination of fair rent which is called The West Pakistan Urban Rent Restriction Ordinance, 1959.
Sample Rental Agreement
Following is an actual rental agreement for sample purposes. Personal details are blurred out.
E Stamp paper Pakistan: https://images.app.goo.gl/dXHzfXxgFZ3YbViY8
You can also find the format of Urdu rental agreement and English rental agreement to understand the basics. Additional clauses can be added to these samples as well.