Most rental problems in Nepal start the same way. Someone shakes hands, pays a deposit, moves in, and never signs a proper paper. Then the water stops, or the rent jumps, or the deposit vanishes at move-out. A written rental agreement fixes almost all of this before it happens.

Here is the short version. Nepal’s rental relationships are governed by the Muluki Civil Code 2074 (Sections 383 to 405). A written agreement is legally required once the monthly rent crosses NPR 20,000. Either side must give 35 days of written notice before ending the tenancy. A residential rental cannot run longer than five years at a time. If your agreement covers these points clearly, you are protected on the things that actually cause fights.

This guide walks through what a rental agreement in Nepal should contain, what the law says, and the practical clauses that save tenants and landlords real money.

What a Solid Rental Agreement Needs

If you only remember one section, remember this checklist. A strong rental agreement in Nepal includes:

• Full names, addresses, and citizenship numbers of both the owner and the tenant
• The property location and plot (kitta) number
• The purpose of the rent (residential or commercial)
• Start date and validity period (five years or less for homes)
• Monthly rent amount, plus the date and method of payment
• Who pays electricity, water, internet, and other utilities
• Who pays the house rent tax
• The security deposit amount and refund terms
• Notice period for leaving or eviction (35 days by law)
• Whether subletting is allowed
• Signatures of both parties and at least two witnesses each

Keep a signed copy for yourself. The law expects both the owner and the tenant to hold one.

Is a Written Rental Agreement Legally Required in Nepal?

Yes, in most real cases. Section 386 of the Muluki Civil Code says a written agreement is not mandatory only when the monthly rent is NPR 20,000 or less. Above that, a written contract is the legal expectation.

In practice, sign a written agreement no matter what the rent is. A verbal deal gives you almost nothing to stand on if the other side changes the story. Rent in Kathmandu, Lalitpur, and Pokhara routinely crosses NPR 20,000 for a family flat anyway. So most tenants are already in the “must have paper” zone, whether they realize it or not.

The Code also asks for two witnesses from each side to sign the agreement. That sounds formal, but it is easy. A neighbor, a relative, or a friend can witness. Their signatures make the document far harder to challenge later.

What the Law Says: Your Rights Under the Civil Code

The Muluki Civil Code 2074 sets the baseline rules for every tenancy, even the parts your agreement forgets to mention. Here are the ones that matter most.

Maximum rental period

Section 385 caps a residential rental at five years per agreement. When it expires, you can renew with a fresh agreement. Commercial rentals can run for whatever period the two sides write down.

35 days notice, both ways

This is the rule people quote most often, and for good reason. A tenant who wants to leave early must give the owner written notice at least 35 days in advance. A landlord who wants the tenant out must also give 35 days of written notice and must state the reason. No surprise “leave by next week” demands are allowed.

A tenant can leave before the term ends in specific situations. Examples include the owner failing to meet their obligations, the tenant no longer needing the space for its purpose, or the owner breaking the agreement.

A landlord can seek eviction on defined grounds too. These include unpaid rent, illegal activity in the unit, the owner genuinely needing the house, major repairs, an unsafe structure, or the term simply ending. Even then, the 35 day written notice comes first.

Who pays the tax

Unless your agreement says otherwise, the Code puts the house rent tax on the owner. If the owner does not pay it, the tenant can pay and deduct that amount from the rent. Most agreements assign this clearly to avoid confusion, so read that line.

Repairs and habitability

Section 384 bars renting out a house that is unsafe for human living from a health or safety angle. The owner must disclose known faults in the structure. Beyond that, unless the agreement says otherwise, day-to-day upkeep of the rented space falls to the tenant. Big structural repairs are a different matter, so spell out the split in writing.

When rent is due

If your agreement does not fix a payment date, the Code says rent is payable within seven days after the month ends. Better to name an exact date in the contract, for example the 5th of each month, so there is no gray area.

Security Deposit: The Number One Source of Disputes

Nepal has no statutory cap on how large a security deposit can be. Market practice sets the norm instead. For residential rentals, most landlords ask for two to three months of rent as a deposit, though some request more for higher-value or furnished homes.

The deposit is the single biggest cause of end-of-tenancy fights. Protect yourself on both sides:

If you are the tenant, get the deposit amount written into the agreement in numbers and words. Take dated photos of the flat on the day you move in. Note any existing cracks, stains, or broken fittings and get the owner to acknowledge them. Keep every rent receipt.

If you are the landlord, list in the agreement exactly what can be deducted. Normal wear is not damage. Spell out how long you will take to refund. A common practice is returning the balance within 15 to 30 days of move-out, after adjusting for unpaid bills or genuine damage.

There is no legal refund deadline, so the agreement is your only real protection here. Write it down.

House Rent Tax: What Tenants and Landlords Should Know

Rental income is taxed in Nepal, and collection sits largely with local governments. The common house rent tax rate is around 10 percent of the rent, though the exact figure and process can vary by municipality across Nepal’s local levels. Rates and rules change, so confirm the current figure with your ward or municipal office before you assume a number.

For a tenant, the practical point is simple. Your agreement should state who bears the tax. By default it is the owner. For a landlord, declaring rental income and paying the local tax keeps you clear of penalties. It also gives you a clean paper trail if a dispute ever reaches the ward office.

How to Write the Agreement, Step By Step

You do not need a lawyer to draft a standard residential rental agreement, though a quick legal review never hurts for high-value or commercial deals. Here is a workable sequence.

First, gather documents. Both sides need a citizenship copy. The owner should have the land ownership certificate (lalpurja) so the tenant can confirm they are dealing with the real owner. This one check stops a surprising number of rental scams.

Second, fill in the core terms. Names, addresses, citizenship numbers, the plot number, the purpose, the start date, and the validity period.

Third, write the money terms. Monthly rent in figures and words. The exact payment date and method. The deposit amount and refund conditions. Any agreed schedule for future rent increases, so nobody is shocked a year in.

Fourth, split the running costs. State clearly who pays electricity, drinking water, tanker water, internet, waste collection, and any shared building charges. In apartment complexes, name the monthly maintenance fee and who covers it.

Fifth, set the rules. Notice period (at least 35 days), subletting, guests, pets, parking, and the condition the unit must be returned in.

Sixth, sign. Both parties sign, then two witnesses from each side sign. Make two identical copies. Each party keeps one.

For a printed template, a stationery shop near any Malpot office usually stocks a standard “ghar bahal” agreement form in Nepali. Fill it carefully rather than leaving blanks.

Should you Register the Rental Agreement?

Registering the agreement at the ward office is not required for every tenancy, but it adds a layer of protection. A registered agreement carries more weight if a dispute lands in front of the municipal judicial committee. For long leases, commercial spaces, or any arrangement where large sums move, registration is worth the small effort and fee. Check your local ward office for the current process and cost.

What to do When a Dispute Happens

Nepal handles most rental disputes at the local level, not the regular courts. If talking it out fails, the path usually runs through the ward or municipal office. The municipal judicial committee can hear both sides and issue orders, including eviction when the grounds are valid.

To make that process work in your favor, you need evidence. The written agreement, rent receipts, move-in photos, and any written notices are what decide these cases. This is exactly why the paperwork at the start matters so much. A tenant with a signed agreement and receipts is in a far stronger position than one relying on memory.

Keep every written notice too. If you give or receive a 35 day notice, keep a dated copy. It proves the clock started when you say it did.

Common Mistakes to Avoid

A few errors show up again and again in Nepali rentals.

Skipping the written agreement to “keep it friendly.” Friendly is fine until it is not. The paper protects the relationship, it does not damage it.

Leaving the deposit terms vague. “Refundable deposit” with no conditions is an invitation to argue later.

Not checking the lalpurja. Confirm the person renting to you actually owns or controls the property.

Forgetting the utility split. Unpaid electricity or water bills at move-out often get pulled from the deposit. Decide up front.

Ignoring the notice period. Both sides owe 35 days. Walking out early without notice can cost you the deposit.

Frequently asked questions

Is a written rental agreement mandatory in Nepal?

It is legally required when monthly rent is above NPR 20,000, under Section 386 of the Muluki Civil Code. Below that it is optional by law, but you should still sign one. A written contract protects both sides regardless of the rent amount.

How much notice must a tenant or landlord give before ending a tenancy?

At least 35 days of written notice, in both directions. A landlord must also state the reason for eviction. This is set by the Civil Code and applies even when the agreement does not mention it.

How much security deposit is normal in Nepal?

There is no legal maximum. Common market practice for residential rentals is two to three months of rent, sometimes more for furnished or premium units. Always record the exact amount and refund terms in the agreement.

What is the maximum length of a residential rental agreement?

Five years per agreement for a residential rental, under Section 385. You can renew with a new agreement after it expires. Commercial rentals can be set for any agreed period.

Who pays the house rent tax, the owner or the tenant?

By default the owner pays, unless the agreement shifts it to the tenant. The rate is commonly around 10 percent of rent but varies by municipality, so confirm the current figure with your local office. If the owner does not pay, the tenant can pay and deduct it from the rent.

Do I need to register my rental agreement?

Not for every tenancy, but registering at the ward office gives the document more weight in a dispute. It is worth doing for long leases, commercial spaces, or high-value arrangements.

Final Word

A rental agreement is not red tape. It is the cheapest insurance you will ever buy against the disputes that actually happen: vanishing deposits, sudden rent hikes, and fights over who pays what. Spend an hour getting the paper right, sign it with witnesses, keep your copy, and hold onto your receipts. That single habit puts you ahead of most renters and landlords in Nepal.

Looking for your next place, or listing one? You can browse verified rentals and post your property on Basobaas. If you are still weighing your options, our guides on renting a flat in Kathmandu, the Nepal land unit converter, and rent versus buy in Nepal are good next reads.

This article is for general information and is not legal advice. Rates, fees, and rules change and can vary by municipality. Confirm current requirements with your ward office, municipality, or a qualified lawyer before acting.