New Rent Rules Coming into Effect From January 2026: What Tenants and Landlords Should Know

In the last 6-9 months, authorities have started rejecting rental agreements that were casually accepted for years. Not because the rules are brand new. But because enforcement has quietly changed. 

That’s why you’re hearing panic statements like: 

• “11-month agreements don’t work anymore” 
• “Security deposits are being challenged” 
• “Eviction feels unpredictable” 

Most of these are half-true and that’s exactly what causes costly mistakes.  

This blog explains the latest rules governing residential and commercial rent agreements, what matters now, what remains effective, and what has become risky, so that you can take action before a problem forces your hand. 

Why New Rental Rules 2026 Matter?

The new rules were introduced earlier, but 2026 is when the non-compliance starts causing real problems 

Here’s what changed in practice under the new rules: 

• Authorities are less tolerant of informal shortcuts 
• Disputes are being decided faster but only if paperwork is clean 
• Old workarounds are being questioned during enforcement, not signing 
• Problems surface at renewal, eviction, or deposit return, not day one 

The biggest change is the death of the hidden agreement. It is no longer optional. 

✅ Compulsory Registration: Every residential and commercial rent agreement must be registered with the Rent Authority. 

✅ The 60-Day Deadline: You must register the agreement within 60 days of signing. 

✅ The Penalty: Failure to comply isn't just a legal lapse; it comes with a financial sting. Non-compliance attracts a penalty of ₹5,000, and more importantly, an unregistered contract may lose its legal validity in court. 

✅ No Verbal Deals: If it isn't written, it doesn't exist. All tenancies must be legally trackable. 

Why is the government pushing this? Simple: Transparency. 

The shift to mandatory Digital Stamping and online registration is designed to eliminate fraud and create a clear trail for Grievance Redressal. 

✅ Better Transparency: Digital trails prevent document tampering. 

✅ Rent Courts & Tribunals: A registered, digitally stamped agreement paves the way for specialized Rent Courts, fast-track courts specifically for residential and commercial disputes, so you don't get stuck in the civil court backlog for 10 years. 

The Major Difference: Registrar vs. Rent Authority 

Most people confuse these two. In 2026, you often need to deal with both, but they serve different purposes. 

Why Were the Rules Updated? 

To understand the rules, you have to understand the problem they are trying to fix. For decades, the Indian rental market was essentially a trust-based system that frequently broke down. 

Before the 2025 updates solidified, the market suffered from: 

The 11-Month Agreement Myth in 2026 

What Changed: For 20 years, people used 11-month agreements to avoid going to the registrar office. It was easy, cheap, and saved stamp duty. In 2026, courts and the new Rent Authorities are rejecting these if a dispute comes up. 

➤ Case in Point: If you need to evict a tenant for non-payment, the Rent Authority or Court will first ask for the registered deed. If you hand them a notarized paper, they may view it as an attempt to evade taxes (stamp duty), complicating your case. 

➤ The Renew and Repeat Trap: Many landlords sign an 11-month agreement and keep renewing it for years. Courts in 2026 are increasingly viewing this as a Lease in Perpetuity disguised to bypass the law. 

New Residential Rules (For Landlords & Tenants) and What this Means for You? 

If you are renting out a flat or looking for a home, here are the specific rules from the 2025 framework that apply to you right now. 

Now you can’t demand 10 months of rent as a deposit (common in cities like Bengaluru or Mumbai). The new framework, Model Tenancy Act encourages capping security deposits to a reasonable limit  Max 2 months for residential and Max 6 months for Commercial).  

• For Tenants: Ensure the agreement states exactly when the deposit returns (e.g., within 7 days of handover). 
• For Landlords: You can no longer deduct money for normal wear and tear. If the paint faded because of time, that’s your cost. If the tenant punched a hole in the wall, that’s their cost. 
• Tip: Your agreement must define what constitutes damage vs. wear and tear. 

You cannot hike the rent arbitrarily, Rent can be increased only once a year, with a 90-day written notice required.   

This can involve two cases: 

1. If the Agreement is Silent: If your contract doesn't mention a hike percentage, the landlord must propose the new rent with a mandatory 90-day (3-month) written notice before the hike becomes active.  
2. If your contract says a 5% hike annually, the landlord cannot demand 15%. They are legally bound by the written terms. 

This prevents arbitrary removals or sudden increases in rent.  

• The Rule: Rent increases must be agreed upon in the agreement itself. If you want to increase rent by 10% after 11 months, write it down. 
• Mid-term Hikes: A landlord cannot hike the rent in the middle of the tenure unless you’ve improved the property (e.g., installed an AC or renovated the kitchen) and the tenant agrees. 

Landlords cannot storm into the house whenever they want. The 2025 rules (applied in 2026) respect the tenant's right to privacy. 

• Requirement: A landlord must give 24 hours' notice (electronic or written) before visiting the property for inspection or repairs only during the day-time 
• Exception: Emergencies (fire, flooding, etc.). 

The biggest fear for landlords is the Squatter. In 2026, the eviction process is streamlined if your agreement has specific Termination Clauses.  

• Bad Clause: Tenant must leave if they don't pay. (Too vague).  
• Good Clause:  
• If rent is unpaid for 2 consecutive months, the License shall automatically terminate. The Licensee must vacate within 15 days, failing which they are liable to pay 2x the daily rent as damages.  
• If there is no action in 30 days, the tenant has the right to fix it themselves and deduct the cost from the rent. 

Good clause includes Non payment, misuse of property, structural alternation  

5. Clear Repair Responsibilities 

To avoid disputes, repair responsibilities are clearly divided between major repairs and routine maintenance. 

Landlord: 

You are responsible for the main assets and the building itself. 

• Structure: Wall cracks, roof leaks, or bad seepage (damp walls). 
• Hidden Faults: Wiring inside the walls or plumbing pipes that burst underground. 
• Old Age: If the Geyser or AC is ancient and just stops working naturally, the landlord replaces it. 

Tenant: 

You are responsible for the things you touch and wear out. 

• Consumables: Fused bulbs, dead remote batteries, or loose tap washers. 
• Accidents: If you break a window pane or crack a mirror, you pay to fix it. 
• Negligence: If you clog the drain by flushing food, or burn a socket by overloading it, that’s on you. 

Commercial Agreement Rules (For Businesses) 

Business leases are higher stakes. A mistake here doesn't just mean losing a deposit; it means losing your shop, your interior investment, and your customers. 

1. Lock-in Periods are Ironclad 

In 2026, courts are strict about Lock-in Periods. 

• Scenario: A startup signs a 3-year lease with a 1-year lock-in. They run out of money in Month 6 and leave. 
• The Law: The landlord can legally claim rent for the remaining 6 months of the lock-in period. 
• The Fix: Startups should negotiate a Diplomatic Clause or Early Exit Clause for insolvency or force majeure. 

2. GST and Tax Compliance 

Commercial rent often attracts GST (if above ₹20 Lakhs turnover for the landlord). 

• Your agreement must clearly state: Is the rent inclusive or exclusive of GST? 
• Ambiguity here leads to massive tax notices later. 

• TDS on Rent: 10% (Applicable on land/building/furniture if rent > ₹2.4 Lakhs/annum). 
• TDS on Maintenance: 2% (Often treated as a contractual payment under 194C, separate from rent). 

3. Usage Rights (The Misuse Clause) 

If you rent a space for an IT Office but start running a Cloud Kitchen, the landlord can evict you immediately for misuse of premises. 

How to Create a Compliant Rent Agreement in 2026?

In 2026, you cannot just sign and forget. Here is the exact step-by-step process to ensure your agreement is fully compliant. 

Step 1: Drafting (The Foundation) 

• Draft the agreement with the new 2025/2026 compliant clauses (Deposit Cap, Repair Responsibility, Force Majeure). 
• Don't use old formats. Ensure it mentions the specific Rent Authority rules of your state.  

Step 2: Digital Stamping (The Tax) 

• Pay the Stamp Duty online (e-Stamping). 
• Rate: Varies by state (e.g., 0.25% to 0.5% of total rent). 
• Note: Physical stamp papers are obsolete in most major cities; use the SHCIL or state treasury portal. 

Step 3: Execution (The Signing) 

• Both Landlord and Tenant must sign the agreement. 
• Witnesses: You need two witnesses to sign as well. 
• Modern Way: Many states now allow Aadhaar-based e-Signatures, removing the need for physical wet ink signatures. 

Step 4: Registration with Sub-Registrar (The Validity) 

• Submit the signed, stamped document to the Sub-Registrar’s office (SRO). 
• Process: Biometric verification (fingerprint/iris scan) of landlord and tenant. 
• Result: You get a Registered Rent Agreement with a registration number. 

Step 5: Intimation to Rent Authority (The Compliance) 

• This is the new step. Once you have the Registered Agreement from Step 4, you must log in to your state’s Rent Authority Portal (e.g., Tenancy Portal). 
• Upload: Upload the Registered Agreement and fill in the key details (Rent amount, Tenure, Deposit). 
• Result: The system generates a Unique Tenancy ID. 
• Why this matters: If you ever need to evict a tenant or recover dues, the Rent Court will first ask for this Tenancy ID. 

Common Mistakes to Avoid in 2026 

Even smart people make silly mistakes with contracts. Here is what we see most often at DigiLawyer. 

Mistake 1: Relying on Copy-Paste Templates 

You download a template from a random website. It looks legal. It has Whereas and Hereafter. 

• The Problem: It might be based on UK law, or it might miss crucial Indian clauses like Force Majeure (vital since COVID) or Data Privacy. 
• The Fix: Use a platform that updates its drafts in real-time based on current Indian case law. DigiLawyer doesn't just give you a template; we generate an agreement tailored to your specific answers. 

Mistake 2: Skipping Police Verification 

In many states (like Maharashtra, Delhi, Karnataka), Tenant Police Verification is not optional,it is mandatory. 

• The Risk: If your tenant commits a crime and you haven't verified them, you (the landlord) can face legal action for negligence. 
• The Fix: Always run a background check. It acts as a massive deterrent against bad actors. 

Mistake 3: Verbal Promises 

Don't worry, I will fix the leakage next month. It's okay, you can pay rent by the 15th. In 2026, if it isn't in the agreement, it doesn't exist. Verbal waivers are the #1 cause of he-said-she-said battles in court. 

A Practical Checklist Before Signing 

Before you put your signature on that dotted line, run through this 2026-proof checklist. 

1. For Landlords: 

• Correct Agreement Type: Is it a Leave & License (safer) or a Rent Agreement? 
• Rent Escalation: Is the % increase clearly written? 
• Maintenance Charges: Who pays the society's maintenance? (Usually landlord, but can be tenant). 
• Damages Clause: Is there a penalty for overstaying? 

2. For Tenants: 

• Lock-in Period: Can I leave early if I lose my job? 
• Security Deposit Refund: Is there a deadline for the landlord to return my money? 
• Notice Period: Is it mutual? (If the landlord can fire you in 1 month, can you leave in 1 month?) 
• Hidden Costs: Are there hidden charges for water, parking, or club usage? 

How DigiLawyer Solves This

We built DigiLawyer because we realized that 90% of legal disputes in India start with bad paperwork. 

Most people don't want to hire a lawyer for a rent agreement because it feels expensive and slow. So they take shortcuts. But in 2026, those shortcuts are becoming expensive. 

DigiLawyer is the middle path. We aren't a law firm that charges by the hour. We are a legal-tech platform that gives you lawyer-grade protection with the speed of an app. 

Frequently Asked Questions (FAQs)