INDIA Law and Practice Contributed by: Vivek Chandy, Archana Tewary, Kumarmanglam Vijay and Megha Arora, JSA
5.6 Annual Entity Maintenance and Accounting Compliance The costs for entity maintenance vary based on the type of entity involved. Annual compli - ance costs for a private limited company would typically be around GBP15,000, and similar or lower costs can be anticipated for compliance by LLPs. 6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time The law recognises leases and licences that permit a person to occupy and use real estate for a limited period of time without acquiring the absolute title to said real estate. The transaction is a lease if it grants an interest in the premises; it is a licence if it gives a right to a permissive user with no interest in the premises. 6.2 Types of Commercial Leases The law does not differentiate between different types of commercial leases. Most commercial leases are based on fixed rental and fixed term concepts. There are triple-net leases where the tenant bears the cost of the property tax, insur - ance and maintenance charges, and profit-shar - ing leases where the rent is based on a percent - age of the lessee’s revenue, but these are not as common. 6.3 Regulation of Rents or Lease Terms Rent or lease terms are freely negotiable in con - tracts entered into between parties, except in a few states in India where some properties are regulated by rent control statutes and where there are statutory tenants. Rent and lease terms largely depend on the city, the location of the building and the market rents payable for
similar buildings. While some state governments proposed that landlords of residential premises should not evict tenants during the COVID-19 pandemic, such restrictions are not generally in force now. 6.4 Typical Terms of a Lease Duration of Lease Term There are no regulations governing the term of a lease, which can be contractually agreed and recorded by the parties. The initial term of a lease is generally three to five years. Tenants can opt for longer leases of ten years. It is common to have an agreement to lease for a longer period (paying nominal stamp duty) and to execute lease deeds thereunder, as such structuring can result in lower stamp duty. Maintenance and Repair Maintenance and repair of the actual premises occupied by the tenant are generally the tenant’s responsibility. In most cases, major or structural repairs (that are not attributable to the tenant) are excluded from the tenant’s scope. Frequency of Rent Payments In most commercial leases, rents are payable on a monthly basis in advance. For retail leases (malls, hotels and so on), lease rent or a por - tion thereof can be based on the turnover of the lessee’s revenue at the establishment. Where a furnished space is provided, rent may be pay - able on the furniture and fittings only until the cost of such furniture and fittings has been fully depreciated. COVID-19 Issues Under TOPA, the tenant has the option to ter - minate the lease if the property is destroyed or becomes unfit for occupation because of fire, tempest, flood, violence by mob or any other
355 CHAMBERS.COM
Powered by FlippingBook