Model Tenancy Act

Implications and benefits for India’s rental housing

The Centre on Wednesday approved the Model Tenancy Act(MTA), 2021 with a provision to set up district-wise rental courts, authorities and tribunals across the country. The Union Cabinet chaired by PM Modi approved the Act for circulation to all states and UTs for adaptation by way of enacting fresh legislation or amending existing rental laws.

“We have a lot of demand for housing and we have availability of housing,” said Minister of Housing and Urban Affairs Hardeep Singh Puri to ET Now. However, according to the 2011 census, India has over 1 crore units that are lying unutilised, and the number may be much higher now, as per Puri.

The MTA will unlock vacant houses for renting purposes and promote private participation in addressing the housing shortage. Real estate experts believe the approval of the act may be a game-changer and provide a boost to rental housing in India.

Here’s what you need to know:

• The MTA is a regulatory framework for residential and commercial, urban and rural, as per Puri
• The MTA will be applied prospectively and not affect existing tenancies
• A written agreement will be required between the owner and tenant for rent and duration of tenancy which is to be submitted to the district’s rent authority
• The maximum-security deposit limit for residential premises will be two months and for commercial properties six months
• The maximum-security deposit limit is indicative, and the Centre is not prescribing any limits, said Puri. “At the end of the day, it is the states which have the primary jurisdiction for this, and the landlord and the tenant who will determine it,” he adds
• Unless stated otherwise in the tenancy agreement, the landlord will be responsible for structural repairs (except those caused by the tenant), whitewashing of walls, painting of doors and windows, changing and plumbing pipes, internal and external electrical wiring, and sundry maintenance
• Drain cleaning, socket repairs, kitchen fixture repairs, replacement of glass panels, and maintenance of open spaces among others will largely be the tenant’s responsibility unless stated otherwise
• Furthermore, any intentional or negligent damage to the property would be the tenant’s purview
• Regarding any cases of conflict over repair work or construction of additional structures on the premises that have been let out to a tenant by the landlord, an application can be taken to the rent court
• However, no property manager can withhold any essential supplies from the tenant
• Tenants will not be evicted during the tenancy agreement period unless otherwise agreed to in writing by both parties
• The tenancy will be deemed to be renewed on a monthly basis if the premises are not vacated and the tenancy not renewed
• The month-to-month tenancy will follow the same terms and conditions set in the expired tenancy agreement for a maximum period of six months
• In case of non-vacancy, the tenant will be liable to pay compensation of double the monthly rent for two months and four times of the monthly rent thereafter
• Revisions of rent are permitted as per the terms set out in the tenancy agreement
• If rent revision is not in the agreement, the landowner can give a notice three months before the revised rent becomes due
• If the tenant fails to give a notice of termination, they must accept the proposed revised rent

“I have no doubt that with the passage of time when this Model Tenancy Act becomes entrenched in the law, rules, and regulations of the state governments and the union territories, all the other areas will also see some benefit,” said Puri. Source link

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