Legal compliance for PG and hostel owners
How to draft a PG rent agreement in India
Every clause a paying guest agreement needs, why it matters when a tenant disputes a deposit or an electricity bill, and a free format you can fill in today.
A PG agreement is a licence, not a lease
A rental lease hands over possession of a property. A paying guest stay does not: the guest occupies one bed in a room you continue to control, with services like meals, housekeeping and electricity bundled around it. That difference is why a PG agreement is written as a leave and licence, usually for eleven months, and why copying a flat rental format from the internet leaves you exposed.
Stamp duty, registration thresholds and police verification rules differ by state. The structure below holds everywhere in India; the amounts, stamp value and jurisdiction line are what you adjust locally.
The twelve clauses your agreement needs
Parties and KYC details
Full name, permanent address, phone, email and government ID of both the owner and the paying guest, plus an emergency contact. This is the record you will need for police verification and for chasing dues later.
Premises: bed, room and sharing
Name the bed number, room number and sharing type, not just the building. In a PG you are licensing a bed, so the document should describe exactly that.
Licence, not lease
State that the arrangement is a leave and licence to occupy and does not create a tenancy or transfer any interest in the property. This single line is the most important difference between a PG agreement and a rental lease.
Term and renewal
Start date, duration and end date. Eleven months is the usual term because it keeps most states outside compulsory registration, with renewal by written consent.
Monthly fee and due date
Amount in figures and words, the day of the month it falls due, the payment mode, and the late fee per day after a grace period. A fixed due date is what makes automated billing and reminders possible.
Security deposit and refund window
Amount, date paid, what can be deducted, and the number of days within which the balance is refunded after vacating. Vague deposit terms cause more PG disputes than anything else.
Electricity and utilities
Either included in the fee or charged per unit on a sub meter. Record the opening meter reading and the rate per unit so the first bill can be checked against the agreement.
Services included
Furnishing, meals, housekeeping frequency, laundry, Wi-Fi, water and power backup. Write down what is included so nobody argues about it in month three.
House rules
Gate timing, visitors, alcohol and smoking, cooking in rooms, quiet hours, and no subletting the bed. Keep them short enough that a tenant will actually read them.
Damage, loss and inspection
The guest pays for damage beyond normal wear and tear, the owner is not liable for personal valuables, and the owner may inspect the room after reasonable notice.
Notice period and vacating
Notice in days from either side, return of keys and access cards, and clearance of all dues including the final electricity bill before the deposit is refunded.
Termination, jurisdiction and inventory
Grounds for immediate termination, the city whose courts have jurisdiction, and an annexure listing the furniture handed over with its condition. Sign with two witnesses.
Four mistakes that cost owners money
Calling it a rent agreement in the body
If the document reads like a lease, a dispute can be argued as a tenancy. Use licensor and licensee language throughout.
No opening meter reading
Without a recorded starting reading there is no honest way to raise the first electricity bill, and every later bill is questioned.
Deposit terms with no timeline
A refund promise without a day count is unenforceable in practice. Put a number of days in writing.
House rules only spoken at check-in
Rules that never made it into the signed copy are the first thing a tenant disputes when you enforce them.
Free PG rent agreement format
Fill in the blanks, print it on stamp paper of the value your state requires, and sign it with two witnesses. Keep a scanned copy against the tenant record.
PAYING GUEST (PG) ACCOMMODATION AGREEMENT This Agreement is made on ____ day of ____________, 20____ at ____________. BETWEEN The Owner / Licensor: ____________________________________ Address: _________________________________________________ Phone: ____________________ Email: ______________________ AND The Paying Guest / Licensee: _____________________________ Permanent address: _______________________________________ Phone: ____________________ Email: ______________________ Government ID type and number: ___________________________ Emergency contact name and phone: ________________________ 1. PREMISES The Owner grants the Paying Guest permission to occupy Bed No. ____ in Room No. ____ (___ sharing) at the property known as _________________________________________________________ on a leave and licence basis. This is a licence to occupy, and does not create any tenancy, lease or transfer of interest in the property. 2. TERM The licence begins on ____ / ____ / 20____ and continues for ____ months, ending on ____ / ____ / 20____, renewable by mutual written consent. 3. LICENCE FEE (MONTHLY RENT) Monthly fee: Rs. ____________ (Rupees ______________________ only) Due date: the ____ day of every calendar month. Payment mode: UPI / bank transfer to ____________________________ Late payment: Rs. ________ per day after ____ days of the due date. 4. SECURITY DEPOSIT Refundable deposit of Rs. ____________ paid on ____ / ____ / 20____. Refundable within ____ days of vacating, after deducting unpaid dues and the cost of damage beyond normal wear and tear. 5. ELECTRICITY AND UTILITIES Electricity is charged at Rs. ________ per unit on sub meter readings, or included in the monthly fee (strike out whichever does not apply). Opening meter reading: ____________ on ____ / ____ / 20____. Water, internet and common area charges: included / Rs. ________ per month. 6. SERVICES INCLUDED Furnishing: bed, mattress, cupboard, study table, chair, fan Meals: none / breakfast / two meals / three meals Housekeeping: ____ times per week Laundry: included / not included Wi-Fi, water purifier, power backup: as available at the property. 7. HOUSE RULES a. Entry gate closes at ______ hrs. Late entry needs prior intimation. b. Guests are not allowed inside rooms without written permission. c. Alcohol, smoking, drugs and gambling are strictly prohibited. d. Cooking in rooms and use of heaters or induction plates is prohibited. e. Quiet hours between ______ hrs and ______ hrs. f. The Paying Guest shall not sublet or transfer the bed to any person. g. The Paying Guest shall keep the room and common areas clean. 8. DAMAGE AND LOSS The Paying Guest is liable for damage to furniture, fittings or the building caused by negligence. The Owner is not responsible for loss of cash, jewellery, laptops or other valuables belonging to the Paying Guest. 9. NOTICE AND VACATING Either party may end this Agreement by giving ____ days written notice. On leaving, the Paying Guest shall hand over the room in its original condition, return all keys and access cards, and clear all outstanding dues including the final electricity bill. 10. TERMINATION FOR BREACH The Owner may terminate this Agreement with ____ days notice, or immediately in case of illegal activity, non payment for ____ days, or repeated breach of the house rules in clause 7. 11. INSPECTION The Owner or authorised staff may enter the room for inspection, repair or maintenance after reasonable prior notice, except in an emergency. 12. KYC AND POLICE VERIFICATION The Paying Guest shall provide a valid government photo ID, a passport size photograph, and cooperate with police verification where required by the local authority. 13. DISPUTES This Agreement is governed by the laws of India. Disputes are subject to the jurisdiction of the courts at ____________________. 14. ANNEXURE: INVENTORY HANDED OVER Item Quantity Condition _________________________ ________ _____________ _________________________ ________ _____________ _________________________ ________ _____________ Signed by the parties on the date first written above. OWNER / LICENSOR PAYING GUEST / LICENSEE Name: ______________________ Name: ______________________ Signature: _________________ Signature: _________________ WITNESS 1 WITNESS 2 Name: ______________________ Name: ______________________ Signature: _________________ Signature: _________________ Note: this template is a general starting point and not legal advice. Stamp duty and registration rules differ by state. Have the final draft checked by a lawyer in your state before you use it with tenants.
This template is a general starting point, not legal advice. Have the final draft checked by a lawyer in your state.
Common questions
- Does a PG agreement need to be registered?
- Most run for eleven months or less and are executed on stamp paper without registration, but stamp duty and registration thresholds vary by state. Confirm your state rule before signing.
- How much security deposit is normal?
- One to two months of the monthly fee in most Indian cities. Write the exact amount, the permitted deductions and the refund window into clause 4.
- Can the monthly fee be raised mid term?
- Not unless the agreement says so. Add a renewal clause with the escalation percentage if you plan to revise at renewal.
- What notice period should I use?
- Thirty days from either side is standard and gives you time to fill the bed. Anything shorter tends to leave rooms empty mid month.
After the agreement is signed
The agreement fixes the numbers: monthly fee, due date, deposit, electricity rate and opening meter reading. PGKhata then runs them every month. Store the tenant record with the ID proof, set the room and rent, and on the 1st every active tenant gets a bill with rent, electricity on meter readings and any other charges, with a UPI QR inside it. Paid bills mark themselves and overdue ones get reminders.