UP Cuts Stamp Duty On Rent Agreements: What Landlords, Tenants Save Now

A rent agreement in Uttar Pradesh could soon become much cheaper to register, especially for people entering into longer leases.

The Uttar Pradesh Cabinet has approved a revised structure for stamp duty and registration fees on rent and lease agreements running for up to 10 years. The move is aimed at making formal rental agreements more affordable and encouraging landlords and tenants to register their contracts instead of relying on informal arrangements. 

The change could be particularly significant for longer-term leases. Under the revised structure, the cost of registering a 10-year lease with an average annual rent of up to Rs 10 lakh will fall sharply.

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UP Rent Agreement Stamp Duty: What Has Changed

The new system divides rental agreements into three tenure categories: up to one year, more than one year and up to five years, and more than five years and up to 10 years.

For agreements where the average annual rent is up to Rs 2 lakh, the stamp duty will be Rs 1,000 for a tenure of up to one year. It will rise to Rs 2,000 for agreements of more than one year and up to five years, and Rs 4,000 for agreements running beyond five years and up to 10 years.

For annual rent between Rs 2 lakh and Rs 6 lakh, the corresponding stamp duty will be Rs 3,000, Rs 6,000 and Rs 8,000. Similarly, for annual rent between Rs 6 lakh and Rs 10 lakh, the rates will be Rs 4,500, Rs 10,000 and Rs 13,000.

Importantly, the registration fee will be equal to the stamp duty under each slab. For agreements where the annual rent exceeds Rs 10 lakh, the concession will apply to the first Rs 10 lakh. The amount above Rs 10 lakh will continue to attract the existing rates. Notably, toll-related and mining leases are not covered by the concession. 

How Much Can Landlords And Tenants Save?

The difference becomes clearer when the numbers are compared.

A one-year agreement for a property with annual rent of up to Rs 2 lakh will now require Rs 1,000 in stamp duty and another Rs 1,000 as registration fee. The total comes to Rs 2,000, compared with the earlier cumulative cost of Rs 10,000. 

The bigger impact is visible in long-term leases. For a 10-year lease with an average annual rent of up to Rs 10 lakh, the registration cost is set to fall from Rs 20 lakh under the earlier structure to Rs 26,000 under the revised structure. 

Why Did UP Change The Rules?

The government has been trying to encourage formal registration of tenancy agreements. Registration is already mandatory for leases exceeding one year. Yet many such agreements have remained unregistered. Principal Secretary, Stamp and Registration, Amit Gupta said this could expose landlords and tenants to legal and financial complications when disputes arise. 

The lower charges are also intended to support implementation of the Uttar Pradesh Regulation of Urban Premises Tenancy Act, 2021. For tenants, a properly registered agreement can provide clearer documentation of the terms of the tenancy. For landlords, it creates a formal record of the arrangement, including the agreed rent, tenure and other conditions.

Earlier, some landlords and tenants opted for relatively inexpensive notarial arrangements instead of registering their agreements. But such informal documentation may not offer the same legal protection in tenancy or eviction disputes. 

Boost To Real Estate Sector

Shorab Upadhyay, Managing Director, TRG Group, told NDTV that lower costs could encourage more landlords and tenants to formalise their rental arrangements.

"The rationalisation of stamp duty and registration fees for rental and lease agreements in Uttar Pradesh is a meaningful step towards making formal tenancy arrangements more accessible. Lower transaction costs can encourage more landlords and tenants to document their agreements through proper registration, bringing greater clarity to rental relationships," Upadhyay said.

Meanwhile, Ashok Nehlia, Founder & CEO, Nehlia Developers, told NDTV that the revised structure could make formal rental agreements more practical for both sides. "The revised stamp duty and registration fee structure can make a noticeable difference to the formalisation of rental agreements in Uttar Pradesh. When the cost of registration becomes more reasonable, landlords and tenants have greater incentive to move away from informal arrangements and establish clearly documented terms," Nehlia said.