PG rental agreement format: what a paying guest agreement should include

Is a PG agreement a lease or a leave and licence?

PG agreements are usually written as leave and licence agreements. The difference matters because leases and licences are covered by different laws and give the occupant different rights.

In Associated Hotels of India v. R.N. Kapoor, the Supreme Court described a document that gives only a right to use property in a particular way, while the owner keeps possession and control, as a licence (SCC Online summary). Calling a document a licence does not settle the question by itself; what the arrangement actually gives the occupant matters. This is one reason to have a lawyer check your format.

Key clauses in a PG rental agreement

Sign one agreement per occupant, for their bed, even in a shared room. Each person then has their own rent, deposit and notice, and one person leaving does not affect the others.

Sample PG agreement clause outline

This is an outline of headings and example wording to help you brief a lawyer. It is not a ready-to-sign agreement.

SAMPLE OUTLINE ONLY. HAVE A LAWYER ADAPT THIS TO YOUR STATE BEFORE USE.

1. Parties
Licensor: [owner name, address, ID]
Licensee: [occupant name, permanent address, ID type and number, phone]

2. Premises and bed
[PG name and address], room [no.], bed [no.], [single/double/triple] sharing. The licensee may use the bed, a cupboard and the common areas. The licensor keeps possession and control of the premises.

3. Nature of the arrangement
This is a leave and licence. It does not create a tenancy or any interest in the premises.

4. Period
From [start date] for [11] months, renewable by mutual written consent.

5. Licence fee (rent)
₹[amount] per month for the bed, due on or before the [day] of each month, paid to [UPI ID / bank account]. Includes: [meals / Wi-Fi / housekeeping / water]. Excludes: [electricity].

6. Security deposit
₹[amount], interest-free, refundable within [7] days of vacating, after deducting unpaid fees, electricity, damage beyond normal wear and tear, and unreturned keys, each with a written reason.

7. Notice and lock-in
Either party may end this licence with [30] days' written notice (WhatsApp accepted). Lock-in: [none / 3 months]. Short notice: fee for the unserved days, deducted from the deposit.

8. Electricity
[Included / ₹__ flat per month / room sub-meter at ₹__ per unit, read on the last day of each month and split as per the house rules].

9. Food
[Meals and timings]. Skipped meals [are / are not] refunded.

10. Visitors
[Visiting hours]. No overnight guests without the licensor's permission.

11. House rules
The house rules in Schedule A form part of this agreement.

12. ID and verification
The licensee will provide ID proof and photographs for records and police verification.

13. Use, damage and entry
No subletting or sharing the bed. The licensee will pay for damage they cause. The licensor and staff may enter for cleaning, repairs and inspection [with notice].

14. Shifting beds
The licensor may move the licensee to an equivalent bed with [3] days' notice.

15. Termination for breach
Serious breach of the house rules allows the licensor to end this licence with [7] days' written notice.

16. Move-out
Room check and final meter reading on the last day, with the licensee present.

Signed: Licensor ________  Licensee ________  Date ________
Witnesses: 1. ________  2. ________

Schedule A: House rules

Does a PG agreement need stamp duty and registration?

Usually it needs stamp duty, and whether it must be registered depends on the state and the length of the agreement. Check your state's current rules with a lawyer, the sub-registrar or the state registration portal before you sign.

• Central rule for leases. Section 17(1)(d) of the Registration Act, 1908 makes registration compulsory for leases from year to year, for more than one year, or reserving a yearly rent. This is the reason often given for 11-month agreements. A licence is not a lease, but some states have their own rules for licences.
• Maharashtra (Mumbai, Pune). Section 55 of the Maharashtra Rent Control Act, 1999 says every leave and licence agreement made after the Act began must be in writing and registered, whatever its length. The owner is responsible for registering it, and the penalty can include a fine of up to ₹5,000, up to three months in jail, or both. Stamp duty under Article 36A of the Maharashtra Stamp Act is 0.25% of the rent for the whole period plus a notional 10% yearly interest on the refundable deposit, as explained by Housing.com. Confirm the current calculation on the IGR Maharashtra portal.
• Karnataka (Bengaluru). Stamp duty falls under Article 30 of the Karnataka Stamp Act. A 2018 table of Karnataka stamp duty rates lists 0.5% of the total rent and money advanced, capped at ₹500, for a residential lease of up to one year. Other guides we checked disagree on what the 0.5% is charged on and on the cap, so we cannot confirm the current figure. Check it on Kaveri Online or with an authorised e-stamp vendor.

Police verification and ID for PG occupants

Collect an ID proof and photograph from every occupant at move-in, and complete police verification as your city requires. Rules and forms differ by state. Our guide to tenant police verification covers how it works.

Keep every occupant's agreement in one place

Once agreements are signed, the hard part is finding the right one when someone gives notice. Domvio's PG management software stores leases and KYC documents for each occupant, alongside their rent reminders and receipts. Domvio does not draft or register agreements. For larger buildings, see hostel management software, or compare the best PG management apps.

Frequently asked questions