Leave and License vs. Lease: Which Rental Agreement Is Right for You?

Renting a home sounds easy — scroll through a few listings, talk to an owner, sign a deal, move in. But in the background of every rented flat lies a key decision that most tenants overlook: Should you sign a lease or go for a leave and license agreement? Both are legal rental agreements, yet they differ significantly in terms of ownership rights, duration, legal protection, and ease of eviction.

Understanding the difference can save you from future headaches — and even from landing in a legal mess. Whether you're a tenant moving into a flat in Bangalore or a landlord listing your property in Gurgaon, here's everything you need to know.

What Is a Leave and License Agreement?

A Leave and License agreement is a legal document that gives the tenant (licensee) the right to occupy the premises temporarily. However, it does not transfer any interest or ownership rights in the property to the tenant.

Key Features:

• Typically short-term (11 months is common)

• Easier to revoke or renew

• Ideal for landlords who want flexibility

• Doesn't create tenancy rights for the occupant

• Often registered under the Indian Easements Act, 1882

What Is a Lease Agreement?

A Lease is a contractual agreement that transfers an interest in the property to the tenant (lessee) for a fixed period. It gives the tenant exclusive possession and more legal protection under the law.

Key Features:

• Usually for 1 year or more

• Transfers possession and partial ownership rights (limited)

• Falls under the Transfer of Property Act, 1882

• Harder to terminate unilaterally

• Offers stronger legal backing to the tenant

Legal Comparison: Lease vs. Leave and License

Here’s a quick legal breakdown of how both agreements differ on major parameters:

Feature Leave and License Lease Agreement Legal Protection Weaker for tenant Stronger tenant rights Governing Law Indian Easements Act, 1882 Transfer of Property Act, 1882 Possession Rights No legal possession Legal possession granted Duration Short-term (usually 11 months) Long-term (usually 1 year or more) Renewal Process Simple; usually auto-renewed Formal process; requires new lease Termination Easier, usually with 1 month notice Complicated; often court intervention Registration Requirement Required above 11 months Mandatory if term exceeds 11 months

Which Agreement Is More Common in India?

In cities like Bangalore, Pune, Gurgaon, and Mumbai, landlords usually prefer Leave and License agreements. Why? Because they offer more control, and evicting a tenant is far easier without going through long legal procedures.

Tenants, on the other hand, may lean toward Lease agreements if they’re looking for long-term stability — especially families who don't want frequent renewals or rent hikes.

Pros and Cons: Leave and License

Pros

• Easy to execute and terminate

• Flexibility in rent increase

• Lesser stamp duty and registration cost (if under 11 months)

• No transfer of legal possession

Cons

• Limited legal protection for tenants

• Often misused for illegal eviction

• Not ideal for long-term stays

Pros and Cons: Lease Agreement

Pros

• Strong tenant rights

• Ideal for long-term residence

• Stable rent and possession terms

• Better clarity in legal disputes

Cons

• Eviction is a lengthy legal process

• Heavier stamp duty and registration fees

• Less flexibility for landlords

Ideal Scenarios: When to Choose What?

Scenario Recommended Agreement You’re a student or working professional renting for <1 year Leave and License You’re a landlord who wants control and flexibility Leave and License You’re a tenant with a family, planning a long-term stay Lease Agreement You’re renting a commercial property Lease Agreement

Common Myths Busted

Myth 1: “Leave and License means I have no rights.”

Truth: While it doesn’t give you ownership or tenancy rights, a registered leave and license agreement can still protect you legally against unfair eviction if proper notice isn’t served.

Myth 2: “Lease is better in all cases.”

Truth: Lease may offer stronger rights, but it’s not always better — especially for landlords who prefer flexibility or want to avoid tenant lock-ins.

Expert Tip: Why Landlords Prefer Leave and License

Leave and License is often used in cities like Mumbai, Delhi NCR, and Hyderabad where landlords want fast, short-term turnover. It avoids the “tenancy rights” trap — where a tenant refuses to vacate and the owner is forced into legal proceedings for eviction. In fact, CirclePe’s zero-deposit model often works hand-in-hand with Leave and License agreements for this very reason: they’re easier to execute and safer for both parties.

Stamp Duty and Registration: What You Must Know

Stamp Duty differs based on your state and agreement type:

• Leave and License (11 months): Low stamp duty, often 0.25%–0.5% of total rent + deposit

• Lease (12+ months): Higher stamp duty, approx. 1%–2% depending on the state

• Registration is mandatory for both if over 11 months.

Avoid under-the-table agreements. Always register your agreement — it legally protects both the tenant and the landlord in case of disputes.

Final Verdict: Which One Is Right for You?

It boils down to what you want from your rental:

• Go for Leave and License if you want short-term flexibility, lower costs, and faster processing.

• Choose a Lease if you want long-term protection, tenant rights, and stability.

Both agreements are legal, valid, and commonly used — but understanding their implications, pros, and legal backing is key to making the right choice.

Looking for Zero Deposit Rentals?

Whether it’s a leave and license agreement in Gurgaon or a lease in Pune, CirclePe helps you rent flats without the burden of security deposits. Move in with ease, pay only monthly rent, and leave the paperwork to us.