Budget 2019 presented by Finance Minister Nirmala Sitharaman proposed a Model Tenancy Law to replace the current rental laws, which she termed “archaic” during her speech. In less than a week, the Ministry of Housing and Urban Affairs has released the Model Tenancy Act, 2019, and has invited comments from the public till August 1 for the same.
Nirmala Sitharaman had said: “It is proposed that several reform measures be taken up to promote rental housing. Current rental laws are archaic as they do not address the relationship between the lessor and lessee realistically and fairly.”
The Model Tenancy Act attempts to smoothen hitches and regulate the renting of premises in the country. However, since land is a state subject, states have a choice on whether they wish to adopt it or not.
It seeks to establish a Rent Authority, who will be appointed by the District Collector. Further, the District Collector will not be below the rank of Deputy Collector.
One of the reasons that the Act was proposed, it states: “The existing rent control laws are restricting the growth of rental housing segment and discourage the landowners from renting out their vacant premises.”
Further, it states that it wishes to notify rules for both residential and non-residential premises and “develop different options of rental housing like individual units, dormitories, hostels, co-living, co-housing, paying guest and employee housing and outline the roles of various stakeholders in order to ensure housing for all”.
One of the foremost things the Model Act proposes is that deposit collected by the owner would be a maximum of two months rent in case of a residential property and one month rent in case of a non-residential property. It also lists obligations of the owner and tenant, lays down rules about the rent agreement, extension of agreement, increase of rent and its acceptance, whose liability it is in certain cases so that money is not arbitrarily deducted for repairs and other damages, etc. It also elucidates on repairs which the tenant is liable to pay and those which the owner should pay.
It also adds that no landowner, property manager or tenant “either by himself or through any person shall cut-off or withhold any essential supply or service in the premises occupied by the tenant or the landowner.” It also lays down conditions for evicting a tenant.
The Act levies a heavy charge on tenants who do not vacate on time. “A landowner is entitled to get compensation of double of the monthly rent for two months and four times the monthly rent thereafter, for the use and occupation of a premise by a tenant who does not vacate the premises after his tenancy has been terminated by order, notice or as per agreement,” it says.
For disputes between owners and tenants, the Model Act proposes a Rent Court and Tribunal, set up in specific areas, which will settle disputes within 60 days. “...only the Rent Court and no Civil Court shall have jurisdiction, except the jurisdiction of Rent Authority under Section 30, to hear and decide the applications relating to disputes between landowner and tenant and matters connected with and ancillary thereto covered under this Act,” it states.