Economy

Cabinet gives approval for Model Tenancy Act

Our Bureau New Delhi | Updated on June 02, 2021

Existing tenancy won’t be affected

The Union Cabinet, on Wednesday, has approved the Model Tenancy Act (MTA). Now, States and UTs can enact new legislation or amend the existing law based on the model provided by the Centre.

“MTA envisages to balance the interests and rights of both the owner and tenant in an accountable and transparent manner,” said a statement issued by the Housing and Urban Affairs Ministry. It hopes the new model law will complement the vision of ‘Housing for All’ by 2022 by making the 1.1 crore vacant houses available for rent.

Talking about the key features of new model law, the Ministry said it will come into effect from a future date, which means existing tenancies will not be affected. “Rent and duration of tenancy to be fixed by mutual consent between owner and tenant through a written agreement,” said the Ministry, adding that model law seeks to cover urban and as well as rural areas.

Security deposit

The model law limits security deposit equal to a maximum of two month’s rent in case of residential premises and maximum of six month’s rent in case of non-residential premises. It mandates for written agreement for all new tenancies, which is to be submitted to the Rent Authority.

The new system prescribes the setting up of a digital platform in the local vernacular language or the language of the State/UT for submitting tenancy agreement and other documents.

According to the Ministry, the effort is to balance the rights and interests of both landlord and tenant, which will help in avoiding disputes.

The model law makes it clear that sub-letting of premises can only be with the prior consent of the landlord. No structural change in the premises by tenant will be permissible without the written consent of landlord. The tenant will continue to pay the rent even during the pendency of a dispute with a landlord.

In order to resolve grievance in a time-bound manner, there is proposal to set up Rent Authority, Rent Court and Rent Tribunal to provide fast-track resolution of disputes. A time frame of 60 days has been proposed for disposal of complaint/appeal by Rent Court and Rent Tribunal.

Anuj Puri, Chairman of ANAROCK Property Consultants, feels that MTA can fuel the rental housing supply pipeline by attracting more investors, and more rental housing stock will help students, working professionals and migrant populations to find urban accommodation (especially in Covid-like exigencies).

“Once implemented in all fairness across States, it will go a long way in formalising and stabilising the rental market,” he said. Rohit Poddar, MD of Poddar Housing and Development, said the Act will help in building a better tenancy market. “The terms and conditions of the rental tenancy are clear to both landlords and tenants and reduce a significant number of disputes that take place due to unwritten agreements, thus the move will benefit both the landlords and tenants by creating a cohesive and sustainable environment,” he said.

Published on June 02, 2021

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