The Model Tenancy Act Draft aiming to transform the lives of tenants and landowners for the good!

The Model Tenancy Act Draft aiming to transform the lives of tenants and landowners for the good!

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Provisions of the Tenancy Law that now every tenant and landowner needs to know NOW!

The draft for Model Tenancy Act was out in 2019, and the Ministry of Housing and Minister Affairs recently told that they will be soon approaching the Cabinet for its approval. Since its first announcement, various eminent real estate personalities have spoken in its favor, like the Magicbricks CFO, Nestaway CEO stating it will promote the interests and ensure the rights of the tenants and the landowners. Indians tend to be skeptical about rental houses, so this Act will provide them security, and promote such practices, thereby also contributing to the economy.

In India, a 2011 census showed that around 1.1 crore houses lay useless, and a 2017-18 study shows the number of vacancies was rising. The surge in migration in the country for better educational, and job purposes, will endorse huge business opportunities in the rental housing segment. Landowners’ fear of losing their properties to malicious tenants, is also dealt with by providing them rights and provision for setting up rent courts. The act provides a balance in rights and favors to tenants and landowners. The current government aspires to provide “housing for all” by 2022. In this direction, the model tenancy act will be positive.

You must know these since they directly affect you – people looking for rental houses and people wanting to rent their houses in near future.

Highlights of the Act

  • It seeks to establish rent authorities, rent courts, and rent tribunals to solve the grievances and feuds between landowners and tenants.
  • All rental housing agreements will thereafter be drafted in written contracts and documents.
  • Rental Contracts copies shall be submitted to rent authority, within 2 months.
  • Rent authority will give them a Unique Identification Number (UIN), and their details will be uploaded on the rent authority website, acting as proofs.
  • 2 months’ rent will be the fixed security deposit for residential properties, and a minimum of 1 month for commercial properties.
  • Landowners cannot halt the services if the tenant is unable to pay rent or for any reason.
  • Landowners cannot increase the rent, without prior notice of three months.
  • If a tenant refuses to vacate, after completion of the agreement, the landowner can ask for twice the rent, and four times after two months’ end.
  • It enlists tenants and landowner’s rights. A tenant can cut the amount s/he pays for repairs landowners refuse to repair, and landlords can deduct the security deposit if the tenant does not repair things they are obliged to.

In Mumbai and Bangalore, landowners collect a security deposit of around 10 to 12 times the rent, and with rising levels of migration in the country, the Act will be pertinent. Some experts raise concern over its implementation as the Model Tenancy Act is not binding on the states, they have the choice to amend them, thus not bearing the fruits the act yearns. It would not affect the on-going tenancies, but effective for new tenancies after its enactment. These provisions and establishment of authorities, UIN will provide for more transparency and accountability on part of both landowners and tenants. The Act is positively awaited for its remarkable schemes to promote rental housing practices, putting ideal houses to use, safeguarding the interests of both landowners and tenants.

This blog is written by Dharna Prasad, Hindu College.

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