Bangladesh Property Lease Law: A Complete Guide (2025)

Introduction

The leasing of immovable property constitutes a vital component of the economic landscape of Bangladesh, underpinning the residential, commercial, and industrial sectors. The legal architecture for leases in Bangladesh is not monolithic; rather, it is a complex, multi-layered tapestry woven from statutes of different eras and with distinct objectives. The foundational principles are rooted in colonial-era legislation, most notably the Transfer of Property Act, 1882, which is overlaid with post-independence statutes designed to address specific socio-economic realities, such as the Premises Rent Control Act, 1991. This confluence of general and special laws creates significant legal tensions, and understanding this intricate legal terrain is essential for any party entering into a lease agreement in Bangladesh.

I. The Legislative Framework for Property Leases

The governance of property leases in Bangladesh is not consolidated into a single code but is distributed across several key statutes. These laws, enacted at different historical junctures, collectively create a framework that balances contractual freedom with social welfare objectives.

A. The Foundational Role of the Transfer of Property Act, 1882 (TPA)

The TPA serves as the bedrock of property law in Bangladesh, governing transfers of property between living persons (*inter vivos*). Chapter V of the Act, encompassing Sections 105 through 117, is exclusively devoted to the subject of leases of immovable property. This chapter provides the essential legal definitions, establishes the default rules for creating a lease, and outlines the fundamental rights, liabilities, and termination procedures that apply to lessors and lessees. The principles enshrined in the TPA are largely derived from the English law of real property and establish the default legal position, which prevails unless specifically modified by a valid contract between the parties or superseded by a more specific statute. It is the primary legislation that defines what a lease is and how it fundamentally operates in the absence of other controlling laws.

B. The Mandate of Registration: The Registration Act, 1908

This law is a procedural statute of immense substantive importance. Its primary purpose is to provide for the registration of documents, thereby ensuring authenticity, giving public notice of transactions, and preventing fraud. For lease agreements, its provisions are not merely administrative but are determinative of the lease's legal validity. Section 17(1)(d) of the Act makes the registration of any lease of immovable property for a term longer than one year, or reserving a yearly rent, compulsory. The consequence of failing to register, as stipulated in Section 49, is severe: the document has no legal effect on the property and cannot be used as evidence of the transaction. This makes registration an indispensable step for securing and enforcing long-term leasehold rights.

C. Tenant Protections: The Premises Rent Control Act, 1991 (PRCA)

In stark contrast to the contract-oriented TPA, the PRCA is a special law enacted with a clear social welfare objective: to regulate rents and provide tenants with significant protection against arbitrary eviction, particularly in urban residential and commercial settings. The PRCA's most potent feature is the *non-obstante* clause in Section 18, which begins, "Notwithstanding anything contained in the Transfer of Property Act, 1882 or the Contract Act, 1872...". This provision gives the PRCA an overriding effect over the general laws of property and contract in matters of eviction. The Act establishes a quasi-judicial authority known as the "Controller," who is empowered to fix a "standard rent" for a premises, thereby limiting the landlord's ability to charge market rates. A key legal concept arising from the PRCA is that of "statutory tenancy," whereby a tenant is entitled to continue in possession of the premises even after the contractual lease term has expired.

D. Interplay with Other Substantive Laws

Several other statutes form part of the regulatory environment for leases.

• The Contract Act, 1872: Since every lease is fundamentally a contract, the Contract Act, 1872, governs its essential elements, such as offer, acceptance, lawful consideration, and the competency of the parties to contract. Section 23 of this Act is particularly significant; it renders void any agreement whose object is forbidden by law or would, if permitted, defeat the provisions of any law.
• The Non-Agricultural Tenancy Act, 1949: This legislation provides a specific framework for tenancies of non-agricultural land, which includes land used for homestead, residential, manufacturing, or business purposes. It defines distinct classes of tenants and governs their rights and liabilities.
• The State Acquisition and Tenancy Act, 1950: This Act is a cornerstone of Bangladesh's land tenure system. Critically, Section 81A(2) of the Act, which deals with non-agricultural tenants, contains an absolute prohibition on subletting, stating that this ban applies notwithstanding any other law or contract to the contrary.

Table 1: Key Legislation Governing Property Leases in Bangladesh

II. Formation and Essentials of a Lease Agreement

Creating a valid and enforceable lease in Bangladesh is contingent upon satisfying specific substantive elements and procedural formalities defined by law. A failure to adhere to these requirements can render the intended lease void or legally unenforceable.

A. Defining a Lease (Section 105, TPA)

According to Section 105 of the TPA, a lease is a transfer of the *right to enjoy* a property for a certain time or in perpetuity, in exchange for consideration (a premium or rent). The landlord retains ownership but gives the tenant the right of exclusive possession, which distinguishes a lease from a mere license.

B. Essential Elements of a Lease Agreement

For a lease agreement to be valid, it must contain the essential elements of any contract, as adapted for a property transaction. These include competent parties, identifiable subject matter, a clear intention to transfer interest, a certain duration, and defined consideration.

C. Formalities: The Requirement of a Registered Instrument

Section 107 of the TPA mandates that any lease of immovable property for a term exceeding one year can **only** be made through a registered instrument, executed by both the lessor and the lessee. The combined effect of the TPA and the Registration Act, 1908, means an improperly executed or unregistered long-term lease is a legal nullity in terms of establishing the leasehold estate. Parties who neglect these formalities expose themselves to catastrophic risk, as their intended long-term tenancy could be legally interpreted as, at best, a month-to-month tenancy.

D. Types of Leases Recognized under Bangladeshi Law

Bangladeshi law recognizes various types of leases, categorized by duration (fixed-term, periodic, perpetual), property type (agricultural vs. non-agricultural), ownership structure (freehold vs. leasehold of government land), and use (residential vs. commercial).

III. Rights and Obligations of Lessor and Lessee

The landlord-tenant relationship is defined by a set of reciprocal rights and duties. While these can be customized by contract, Section 108 of the Transfer of Property Act, 1882, provides a comprehensive default framework.

A. Statutory Rights and Liabilities under Section 108, TPA

Lessor's Liabilities (Landlord's Duties): The lessor must disclose hidden defects, give possession, and guarantee "quiet enjoyment" (no unlawful interference).

Lessee's Rights (Tenant's Rights): The lessee has rights to accretions to the property, the right to avoid the lease if the property is destroyed, the right to make necessary repairs and deduct the cost from rent if the landlord fails to do so, the right to remove fixtures, and the right to crops.

B. The Tenant's Core Obligations

The lessee must pay rent on time, keep the property in good condition (subject to reasonable wear and tear), give notice of any encroachment, use the property only for its agreed purpose, not erect permanent structures without consent, and restore possession to the landlord when the lease ends.

The Subletting Trap: The default right to sublet or assign the lease, granted under Section 108(j) of the TPA, is a legal illusion in Bangladesh. The State Acquisition and Tenancy Act, 1950, imposes a strict, overriding ban on subletting. The language of Section 81A(2) of this Act is unequivocal: "notwithstanding anything contained in this Act or in any other law for the time being in force or in any contract, no non-agricultural tenant shall sublet the whole or any part of his tenancy on any terms and conditions whatsoever". Any sublease created in contravention of this prohibition is illegal and void from its inception.

IV. Restrictive Covenants in Lease Agreements

A central feature of modern lease agreements is the inclusion of covenants that restrict the lessee's use of the property. Their enforceability is a product of the interplay between freedom of contract and statutory and judicial limitations.

A. Common Restrictive Covenants

• Use of Premises: Confining the lessee's activities to a specific purpose, such as "residential purposes only".
• Prohibition on Alterations: Forbidding structural changes without the lessor's prior written consent.
• Restrictions on Assignment and Subletting: Reinforcing the statutory ban and providing a clear contractual ground for termination.
• Non-Compete and Exclusivity Clauses (Commercial Leases): In multi-tenant commercial properties, covenants may restrict the tenant from operating a competing business nearby, or restrict the landlord from leasing to a competitor within the same development.

B. Judicial Enforcement & The Public Trust Doctrine

Where covenants are clear, especially in leases involving public interest, the judiciary has shown a willingness to enforce them strictly. The courts view the lessee of public land not merely as a tenant but as a custodian of a public asset, and a breach of a use-covenant is treated as a violation of public trust.

V. Breach, Termination, and Forfeiture of Leases

The termination of a lease marks the end of the legal relationship. While a lease can end through mutual agreement or expiry, disputes often arise from alleged breaches leading to premature termination through forfeiture.

A. Modes of Determination of Lease under Section 111, TPA

Section 111 of the TPA lists the ways a lease can be determined, including by efflux of time, happening of a specified event, merger, surrender (express or implied), forfeiture, and on expiry of a notice to quit.

B. Forfeiture for Breach of Condition (Section 111(g))

Forfeiture is a powerful remedy allowing a lessor to end a lease for the lessee's default. It arises if the lessee breaches an express condition and the lease provides for a right of re-entry, if the lessee denies the landlord's title, or if the lessee is adjudicated insolvent (and the lease allows for re-entry). Forfeiture is not automatic; the lessor must signify their intention to terminate the lease, typically by giving written notice or filing a suit for ejectment.

C. The Procedural Safeguard: Notice Requirement under Section 114A, TPA

To mitigate the harshness of forfeiture, Section 114A of the TPA establishes a mandatory notice requirement before a lessor can sue for eviction. The lessor must serve a written notice that specifies the breach and, if the breach is remediable, requires the lessee to remedy it within a reasonable time. This notice is a mandatory pre-condition to litigation for most breaches (excluding non-payment of rent and breach of a condition against assignment/subletting).

D. Judicial Scrutiny of Forfeiture: Case Law Analysis

In *Khalishpur Jute Mills Ltd. v. RAJUK*, the Supreme Court upheld a lease cancellation for a long-standing, admitted breach even with a defective notice, applying the "useless formality" principle. However, this is an exception. Generally, procedural failures are fatal to a landlord's case, reinforcing the protectionist character of the Bangladeshi tenancy regime.

VI. The Overriding Effect of the Premises Rent Control Act, 1991

The PRCA is arguably the most significant piece of modern legislation affecting lease agreements in Bangladesh. Its provisions frequently supersede the general principles of property and contract law.

A. The Concept of "Statutory Tenancy" and Protection from Eviction (Section 18)

The cornerstone of the PRCA's protective scheme is Section 18. It gives rise to the legal concept of a "statutory tenancy." When a contractual lease for a fixed term expires, the tenancy does not automatically end if the PRCA applies. Instead, the tenant is entitled to remain in possession, not under the original contract, but under the protection of the statute.

B. Permissible Grounds for Eviction under the Act

A landlord cannot evict a statutory tenant at will. They must file a suit and prove one of the specific, limited grounds enumerated in Section 18, such as breach of a condition, subletting without consent, causing a nuisance, or if the landlord genuinely requires the premises for their own occupation.

C. The "Contracting Out" Dilemma

A major legal grey area is whether sophisticated commercial parties can contractually agree to waive the protections of Section 18. Proponents argue for freedom of contract, while opponents argue it would defeat the public policy purpose of the Act. As of now, there is no definitive ruling from the Appellate Division of the Supreme Court on this issue. This legal grey area creates a significant risk for commercial landlords who often include such waiver clauses in their lease agreements, with no certainty as to their enforceability.

VII. Conclusion and Recommendations

The legal framework governing property leases in Bangladesh is a complex amalgamation of colonial-era general laws and post-independence special legislation. The core tension lies between the principle of contractual freedom and the social welfare objectives of the PRCA. Navigating this landscape requires a holistic understanding that goes far beyond the four corners of the lease agreement itself.

A. Practical Recommendations for Landlords and Tenants

B. Strategic Considerations for Foreign Investors and Commercial Entities

For foreign investors and commercial entities, who can lease but not own land in Bangladesh, the legal landscape presents unique challenges. The primary risk is the uncertainty from the PRCA's security of tenure provisions, which can impact commercial operations and exit strategies. Rigorous legal due diligence is paramount, including a specific analysis of whether the property falls under the PRCA's jurisdiction and the potential enforceability of any waiver clauses. A clear understanding of applicable taxes and fees—including stamp duty, registration fees, and VAT on commercial properties—is also essential for accurate financial modeling.