MODEL TENANCY ACT 2019
The Indian rental market has long been run by an unorganised system. With the Model Tenancy Act the government for the first time has given rental housing its due attention.
TEXT: LEANDRA MONTEIRO
Till recently, not much had been done to improve the rental housing situation in the country. This is a serious void, since rental housing, by itself, can help bridge the gap caused by the shortage of adequate housing in India.
Government with a vision of ‘Housing for All’ is now undertaking more holistic methods which include, regularising the rental housing market. This will also, encourage new emerging platforms like co-living and student housing in order to provide additional housing and create ready service apartments as a business model.
The New Model Tenancy which is likely to be re-introduced is expected to balance the rights and responsibilities of both landlords and tenants that will make the rental market more efficient and streamlined across the country.
CHALLENGES TO OVERCOME
The rental market in the country has long been neglected and as a result has turned into an arena of dispute. Due to lack of proper legislation, tenant-landlord conflicts are a common occurrence, resulting in a distorted and unorganised rental system.
Unfortunately, India’s urban population has to struggle to find decent rented accommodation, even as millions of properties lie vacant across major markets. The Model Tenancy Act 2019 might be able to change this paradoxical situation. Provisions announced in the model law would make renting a viable option for tenants as well as property owners, if states show the willingness to adopt it in letter and spirit.
Dhiraj Jain, Director, Mahagun Group said, “There are many challenges such as practices like multiple month advance rent which will be difficult to wipe out as it shows the fears of landlords. The Act and the system has to give assurance to the landlords that in case of disputes the process of solving the dispute will not be taxing.”
“Another scenario is where tenant defaults on rent payment or damages the property then a two-month security deposit might not cover the expenses of repairs or losses to the landlord in case of non-payment of rent. As far as impact of model act is concerned, people have to abide by it irrespective of the impact.” adds Nakul Mathur, Managing Director, Avanta India.
Vikas Bhasin, Managing Director, Saya Group stated, “There was an urgent need of the tenancy act as we have seen that many landlords face the problem while renting out their properties. On the same hand, many tenants face numerous hurdles when they seek a home for rent. With India becoming a real estate investment hub, we have many NRIs buying residential properties but they avoid renting it out in the fear that they might face problems when they ask the tenants to vacate the property. Such scenarios leave the infrastructure unutilised and unproductive. This new and refreshed tenancy act will certainly help bring many lakh unsold unit to rental market hence helping fill the demand of houses in every segment, Model Tenancy Act 2019 is at the right time and we might see some good movement in the rental market after it gets implemented by all.”
MODEL TENANCY ACT, 2019 DRAFT
- Security deposit is capped to a maximum of two months’ rent in case of residential property and a minimum of one month’s rent in the case of nonresidential property.
- The landlord cannot indulge in midterm hike in rentals.
- A landlord cannot cut off or withhold essential supplies or services (electricity, water, etc.).
- It is the landlord’s responsibility to rectify structural damages and undertake measures like whitewashing walls and painting doors and windows.
- The property owner must give prior notice of three months before revising the rent value.
- The tenant cannot sublet a part of or the whole property to someone else.
- The landlord is entitled to get a compensation of double of the monthly rent for two months and four times of the monthly rent thereafter if a tenant does not vacate the premises after tenancy has been terminated by order, notice or as per agreement.