Post-Independence, States regulated rental housing through rent control laws. Rental housing is regulated by States as land, land improvement, and control of rents fall under Item 18, List II (State List) under Schedule 7 of the Constitution. If the Item is read with art 246 (3) State Legislature is empowered to make laws. Thus, the State Legislatures may enact their own fresh laws or amend their existing laws based on this model law. The Model Tenancy Act, 2021 was approved by the Union Cabinet on June 2, 2021, for adoption by States and Union Territories. The aim of this Model Tenancy Act is –
- to form a speedy Adjudication mechanism for dispute resolution
- to regulate renting of premises
- to protect the interests of landlords and tenants.
What will Change & Key Features?
- The law is applied prospectively and will not affect existing tenancies.
- The law is not applicable to hotels, lodging houses, Dharamshala, inns, premises for industrial use; premises owned or promoted by the central and state governments, UT, local authority or statutory bodies, premises owned by a company, university, or places given on rent to its employees as part of the service contract; religious or charitable institutions (section 2).
- Formation of Rent Authority– to regulate renting of premises and to protect the rights of landlords and tenants (Section 30 – Section 32 under Chapter VI- Rent Authorities their powers and appeals)
- A written agreement is a must for all new tenancies. The agreement will have to be submitted to the concerned District Rent Authority.
- The amount to be paid as a security deposit by the tenant should not exceed two months’ rent for residential premises and six months for non-residential premises (section 11).
- Sub-letting of property- only with permission of landlord (section 7)
- The tenant shall not make any structural changes in the rental premises without the landlord’s consent (section 26).
- No landlord or property manager can withhold any essential supply to the premises occupied by the tenant (section 20).
- If the tenancy has not been renewed, the tenancy shall be deemed to be renewed on a month-to-month basis on the same terms and conditions as in the expired tenancy agreement, for a maximum period of 6 months.
- Compensation in case of non-vacancy– On the expiry of an extended period of six months of the agreed tenancy period or the termination of tenancy by order or notice, the tenant shall be in default and liable to pay compensation of double the monthly rent for two months and four times of the monthly rent thereafter (section 23).
- The revision of rent between the landlord and the tenant shall be according to the terms of the tenancy agreement (section 9).
- A landowner or property manager may enter a premise in accordance with written notice or notice through an electronic medium served to the tenant at least 24 hours before the time of entry (17).
- Rent Courts and Rent Tribunals are to be set up at the district level to deal with landlord-tenant grievances on a time-bound basis though no specific timeline (Section 33 – Section 38 under Chapter VII-Rent Courts and Rent Tribunals).
- In the case of force majeure conditions such as earthquake, cyclone, war, flood, etc., certain advantages and concessions shall be provided to the tenant and if the tenant is in the termination period, then leniency of an extra month shall be given for him to have enough time to vacate the premises. If the premises has been badly affected due to force majeure condition that it is impossible to reside in it, then the rent shall not be charged till the time the premises has been restored and made suitable to live in (Section 5).
- Mandating the Aadhar number for registration of the rent agreements and further uploading details on a public portal may violate the right to privacy.
- The timeline for resolution of certain disputes by Adjudicatory bodies is not mentioned such as disputes on withholding essential services, revision of rent, and contraventions by property managers.
- The volume of cases might be huge and thus needed a strong rental authority capable of disposing of cases within 60 days
The new Model Tenancy Act is a progressive model law for the States to adopt as it balances the interests of both parties. As this is Model Act, its implementation will only come into effect when States make changes in existing rental laws like Maharashtra has decided to partially enforce the provisions of the new Act while the UP cabinet has passed an ordinance accepting the new Act as it is. This new Act transforms the housing sector in the country.