House rent agreement in Nepal: deposit, notice and what the law actually protects

You are moving out of a flat in Baneshwor after two years. The landlord inspected the place, nodded, and then said he would keep one of your two months' deposit for repainting and "wear and tear." You paid that deposit in cash, there was nothing in writing about how it comes back, and now you are wondering what the law says a landlord can and cannot do.

For most Kathmandu renters the surprise is how little the law says about exactly that. Nepal did write house rent into statute in 2017, and it is firmer than most tenants expect on notice periods and evictions. On the deposit and on rent increases, the two things renters actually lose sleep over, it says almost nothing and hands the question to your agreement. Knowing which is which is the whole game.

What law even governs your rent

Until recently, house rent barely existed in Nepali statute. That changed with the Muluki Civil Code 2074, which for the first time codified renting in Chapter 9 of its property part, Sections 383 to 405. The chapter is explicit that it covers not just a whole house but "a unit or a room," so a single rented flat or even one room falls squarely inside it.

Two structural rules set the frame. A residential rent term is fixed by agreement but cannot exceed five years at a stretch, though it can be renewed by mutual agreement any number of times. And if the deed is silent on when rent falls due, the default is that the tenant pays within seven days of each month ending. Everything else builds on this.

The 35-day rule works both ways

The single most useful number to remember is 35 days. A tenant who wants to leave before the agreed term must give the owner at least 35 days' written notice under Section 400, unless the agreement itself sets something different. Skip the notice and the owner is entitled to recover that period's rent out of your advance.

The mirror applies to the landlord's main discretionary ground. To reclaim the house for personal use before the term ends, the owner has to serve 35 days' written notice under Section 401. Neither side can spring a same-week move on the other for that reason and stay inside the law.

Eviction needs a reason, and "I need it myself" has a catch

A landlord cannot evict on a whim. Section 401 lists the permitted grounds, among them non-payment of rent, using the property illegally, using it against the agreed purpose, altering the structure without permission, a sub-tenant breaching terms, and the owner genuinely needing the house for personal use. An eviction has to fit one of these, and for the owner's own-use ground the 35-day written notice applies.

The "own use" ground carries a specific anti-abuse rule that is worth knowing by heart. If a landlord evicts you saying he needs the house himself, he cannot then re-rent it to anyone else for three months unless he actually moved in. And if he does re-rent it within those three months without using it, you, the previous tenant, have first claim to take the house back. This is the Code quietly closing the oldest eviction trick in the book.

The two things the law does not touch

Here is the gap that catches people. Read the whole chapter and you will not find a single line about a security deposit. There is no cap on how many months of deposit a landlord may demand, and no statutory deadline to return it. A "two-month legal maximum" gets repeated online; it is not in the statute. What exists is custom: Kathmandu Valley landlords typically ask for one to three months' rent as advance or deposit and return it within a few weeks of you leaving, minus unpaid rent and any damage. That is practice, not a right you can enforce unless the deed says so.

Rent increases sit in the same vacuum. The Code sets no ceiling on how much rent can rise and no notice period for a raise. Whether your landlord can push the rent up 20% at renewal depends only on what your agreement's increment clause says. If there is no clause, a unilateral mid-term hike is not authorized, but you do not want to be litigating that. The clean fix is to write the increment in before signing, capping it at a set percentage per renewal.

So the two clauses that decide most of your renting life, the deposit refund and the rent increment, are exactly the ones the law leaves blank. Treat your written deed as the real rulebook, because on these points it is the only one. This is where the true cost of a Kathmandu flat is quietly decided, and it feeds straight into the rent-versus-buy math if you are weighing whether to keep renting at all.

Who does the repairs

A quiet default surprises many tenants: unless the agreement says otherwise, repairing and maintaining the house is the tenant's obligation under Section 394, not the owner's. If your deed does put repairs on the owner and he ignores a written request, you may carry out the repair after giving 15 days' written notice of the estimated cost and then deduct it from rent. The lever exists, but only if the deed assigned repairs to the owner in the first place.

Two more practical rules. The owner may inspect the house but only with advance notice under Section 399, and the "24 hours" figure some blogs cite is not in the statute, which simply says advance notice. And you may sublet only with the owner's consent, telling the owner the sub-tenant's name and address in writing within 15 days.

When it goes wrong: the ward office, not a locksmith

A landlord cannot legally change the locks on a tenant who has vanished. If a tenant disappears for three months or more without paying and cannot be traced, the owner has to apply to the ward office, which issues a 15-day public notice before the house can be opened and the goods safe-kept under Section 404. Even the fallback is supervised: if the ward office itself fails to act within a month, the owner may open the house, but only with a police officer and two local witnesses present. Self-help eviction is not a legal route.

Live disputes follow the same path. The judicial committee at your ward or municipality hears rent cases first under the Local Government Operation Act 2074, and its decision can be appealed to the District Court, which law firms put at within 35 days. The catch is enforcement. An investigation found that of 63 landlord-tenant complaints filed at Kathmandu Metropolitan City over roughly six months in 2017 and 2018, only 11 were actually decided. The forum exists; it moves slowly. A clean written deed is worth far more than a strong case argued a year later.

The tax line, briefly

House rent tax in Kathmandu Metropolitan City is 10% of the rent, with rates running from 10% to 17% across Nepal's local levels, and since 2074 it is the ward or municipality that collects it rather than the Inland Revenue Department. By default the owner owes it, though an agreement can shift the burden to the tenant, so check whether your deed quietly does that. The fuller picture, including how landlords report it, sits in the house rent income tax post.

What you actually need to know

• The law is firm on notice and eviction, blank on deposits and rent hikes. You get a 35-day notice each way, eviction only on listed grounds, and a three-month bar on re-renting after an "own use" eviction. You get no statutory deposit cap, no refund deadline, and no limit on rent increases.
• Your written deed is the real rulebook. Because the Code leaves the deposit and the increment blank, put both in writing: how much deposit, when and how it is refunded, and a capped increment per renewal. Above about Rs 20,000 a month a witnessed written deed is required anyway; below it, get one regardless.
• Disputes go through the ward, slowly. The judicial-committee route exists and can be appealed to the District Court, but it moves at its own pace. A clear deed and a logged, dated deposit save you the fight.

If a landlord is withholding a deposit against terms that were never written down, or you want a second read on a rent agreement before signing, email parjanya57@gmail.com.

This post is part of the Nepal Money Basics guide — the property and real estate section.