With the massive rise of population, it’s a “no brainer” that the need for new or rental houses will increase. The majority of Pakistan’s population belongs to the lower middle or poor class. Hence, it’s likely that they go towards rental houses.
With the influx of new tenants, it’s the landlord’s job to introduce a rent agreement before proceeding to other formalities. Here in this article, we’ll discuss the importance of a rent agreement between both the parties.
What Is A Rent Agreement?
A rental agreement is a short document that shows the approval of both parties, i.e., landlord and tenant, to agree upon the acquisition of the property by the tenant. It’s a stamped document from the sub-registrar to ensure its authenticity and provide cover for both parties from legal issues.
Note: There’s a vital distinction between lease and rent agreement. Once the contract is greater than 11 months and the amount to be paid by the borrower is in a lump sum, then we move towards a lease agreement.
Significance Of Rent Agreement
The significance of the rent agreement can be determined by the laws of the government of Pakistan. It says that it is MUST for the borrower and lender to prepare official documentation that shows the proof of tenants (کرایہ دار) moving to the house.
However, it’s recommended that anyone submit their documentation to the registrar’s office. Every tenant should keep in mind to read the document carefully and double-check every number and point mentioned in it to create an informed decision.
Once all attributes of the matter are agreed upon, either of the parties can have the original paper. However, it’s common that the landlord will have the original copy, and the tenant will have the duplicate one.
Format Of Rental Agreement In Pakistan
Someone may find the term “rent agreement” very geeky or comprised of real estate jargon. But believe me, it’s as simple as any legal agreement. For your flexibility, the government even has designed a custom template for it.
One just has to fill out the required information and get it signed with the tenants and the landlords. And there you go, the rent agreement is ready. You can find the link for the document template here.
After finalizing the document, the landlord or the tenant should register the document with relevant authorities, i.e., the sub-registrar office. Otherwise, in the future, if any of the parties do any mishaps, the court has a right to levy 5% and 10% to the tenant and landlord, respectively.
The stamp duty at the sub-registrar office is 3.25% of Annual Rent + Advance. Then the sub-registrar will return the original, stamped copy of the document to the landlord and a copy to the tenant.
There are some things that you should know while registering for tenancy:
- Original CNIC
- Property information detail
- Mode of payment by the tenants as a monthly rental
- Date of paying rental
- Home address and other basic formalities.
So, the process and the format of creating a rental agreement are straightforward. There’s no need for anyone to know much about legal or real estate laws.
To Sum Up,
To everyone who still has a bit of doubt left about rental agreement issues, ask us on the contact form below. If you have any topic to discuss (related to real estate), any question to ask, or looking for recommendations for investments, do contact RAAS – Smart Property Solution in this regard.
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