Model Tenancy Act

In News

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.

                                                                                                                                                                         Image Courtesy :TOI

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

Source: PIB