Yuva - India

Union Government nods to Model Tenancy Act, 2021

Can this act help rental housing attract more investors? What do the real estate experts have to say about this? Will this act be favourable to help students, working professionals, and migrant populations find urban accommodation?

The Union Cabinet, chaired by Prime Minister Modi approved the Model Tenancy Act (MTA) on 2nd June. This move is considered to overhaul the legal framework involved in renting a house across the country. It is aimed at opening up vacant houses for rental purposes and help overcome the trust deficit existing between tenants and landlords.

Separate rent authorities to be set up along with courts and tribunals in districts to protect the interest of both the landlords and tenants. The Union Government has first released the draft of MTA in 2019.

Minister of Housing and Urban Affairs and Urban Affairs, Hardeep Singh Puri said, “The act will promote rental housing in the country, adding that 1.1 crore vacant houses will be available on rent will complement PM’s vision of Housing for all” by 2022.”

States and Union territories can adopt the Model Tenancy Act by enacting fresh legislation or they can amend their existing rental law suitably.

Real estate experts say that this Act can boost rental housing policy and help the government strengthen its “Housing for all” initiative.

The Ministry of Housing and Urban affairs in a series of tweets acquainted the public about the passed MTA.

The key features of the act are as follows:

  •         The Union said that the Model Tenancy Act aims to create a vibrant, sustainable and inclusive rental housing market in the country. It will enable creation of adequate rental housing stock for all the income groups addressing homelessness.
    •         The act will enable institutionalisation of rental housing by gradually shifting it towards the formal market, it further said.
    •         The Model Tenacy Act talks about establishing a rent authority to regulate renting of premises and to protect the interests of landlords and tenants. The proposed authority will also provide speedy adjudication mechanism for resolution of disputes and matters connected therewith or incidental thereto, according to the act.
    •         It also puts a cap on the amount of security deposit – usually a bone of contention between landlords and tenants – to a maximum of two months of rent in case of residential premises and six months in case of non-residential premises. Currently, this amount differs from one city to another. For instance, in Delhi, the deposit is usually two-three times the monthly rent, but in Mumbai and Bengaluru, it can be over six times the monthly rent.
    •         Another crucial point where the act has provided a mechanism, is vacating the premises. The Model Tenacy Act says that if a landlord has fulfilled all the conditions stated in the rent agreement – giving notice etc – and tenant fails to vacate the premises on the expiration of the period of tenancy or termination of tenancy, the landlord is entitled to double the monthly rent for two months and four times after that.
    •         Every landlord or the property manager may enter the premises let out on rent after serving a notice, in writing or through electronic mode, to the tenant at least twenty-four hours before the time of entry under the following circumstances, the act states.
  •         It has further described in detail the rights and obligations of both landlord and tenant, and has also dealt with many issues which can lead to disputes between the two parties.

Pratheeksha Pawaskar

Journalist, Goa Chronicle Law student, University of Mysore. Criminal Psychology and Constitutional Law are subjects of my personal interest. More of a “Philomath” (sucker for knowledge) with a great sense of humour. Always standing up for what is right.

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DISCLAIMER: This article reflects author’s view point. Goa Chronicle may or may not subscribe to views of the author

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