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The Union Cabinet approved the Model Tenancy Act for circulation to all States / Union Territories for adaptation by way of enacting fresh legislation or amending existing rental laws suitably.
- The government had first released the draft of the act in 2019.
Major Highlights of the Act
- Independent Authority
- It proposed to establish an independent authority in every state and UT for registration of tenancy agreements and even a separate court to take up tenancy related disputes.
- Limits the Tenant’s Advance Security Deposit
- It is limiting the tenant’s advance security deposit to a maximum of two months’ rent and to a maximum of six months for non-residential purposes.
- Model for urban & rural properties
- The Act provides a model for urban & rural properties & templates for residential & commercial properties.
- Applicability
- It will apply to future transactions & take people from informal to specific contract arrangement b/w landlord & tenant
- The Act will apply to premises let out for residential, commercial or educational use, but not for industrial use.
- It also won’t cover hotels, lodging houses, inns, etc.
- This model law will be applied prospectively and will not affect existing tenancies.
- Increase in Rent
- The Act also tries to address how a renter can legitimately increase the rent.
- The Act states that rent can either be increased according to the terms and conditions mentioned in the agreement, or the landowner will have to give a notice in writing to the tenant, three months before the revised rent comes into effect.
- The Act also makes it mandatory for there to be a written agreement between the property owner and the tenant.
- A landowner cannot cut power and water supply in case of a dispute with the tenant.
- A landowner cannot enter the rented premises without 24-hour prior notice to carry out repairs or replacement.
Relevance
- It aims at creating a vibrant, sustainable and inclusive rental housing market in the country.
- It aims to bridge the trust deficit between tenants and landlords by clearly delineating their obligations.
- It will enable creation of adequate rental housing stock for all the income groups thereby addressing the issue of homelessness.
- It will enable institutionalisation of rental housing by gradually shifting it towards the formal market.
- It will facilitate unlocking of vacant houses for rental housing purposes.
- It is expected to give a fillip to private participation in rental housing as a business model for addressing the huge housing shortage
