top of page

MODEL TENANCY ACT 2019 & IT FEATURES









Published by: HARDIK VERMA

Special Student Columnist


“An Act to establish the Rent Authority for regulating rents of premises efficiently and transparently and to balance the interests of the owner and tenant by establishing an adjudicating mechanism for speedy dispute Redressal and to establish Rent Court and Rent Tribunal to hear appeals and for matters connected therewith or incidental thereto”[1]

INTRODUCTION

In an offer to adjust the rights and interests of the two landlords and tenants, and make satisfactory rental lodging stock in the nation, the Ministry of Housing and Urban Affairs has drafted the Model Tenancy Act, 2019. It might be noticed that Finance Minister Nirmala Sitharaman had likewise discussed this Act in her maiden Budget 2019 speech, saying that to advance rental housing, the legislature will take up a few measures, including the conclusion of a Model Tenancy Law. That is because the "current Rental Laws are bygone as they don't address the connection between the Lessor and the Lessee all things considered and decently."


It is accepted that the Draft Model tenancy act looks to update the legal framework versus rental lodging across India and may likewise give a lift to private cooperation in this portion. No compelling reason to state that industry specialists and engineers have invited the Act. MTA has likewise been drafted to accommodate speedy dispute Redressal by building up adjudicatory bodies under MTA. It likewise attempts to make a responsible and a straightforward condition for leasing the premises and elevates a maintainable environment to different fragments of society, including migrants, professionals, students, understudies, and urban poor. The Tenancy law is a 'model act' because the land is a state subject and states will have the choice to receive or dismiss it. It imagines adjusting the intrigue and privileges of both the landlord and tenant and to make a responsible and straightforward ecosystem for leasing the premises in a restrained and effective way. MTA specifies a strong complaint Redressal instrument containing Rent Authority, Rent Court, and Rent Tribunal. Landlords will likewise have the option to charge leases that are to be chosen by the individual state governments, comparable to showcase rates. Besides, it was proposed to restrict the security deposit to a maximum of two-month rent for residential properties and a minimum of one-month rent for non-residential properties. MTA suggests annihilating the current rental lodging issues by fusing needful arrangements.


In its preamble, MTA acknowledged the issues with current rent control laws as a lack of development in the rental housing segment and a lack of landlords leasing out their vacant premises. MTA allows for a market-oriented strategy of leaving the rental sum to be set on the parties[2], Who can fix or revise it in the light of the current market value of the premises and thereby increase the possibilities of a high rate of return on the rental housing market for investors. On the other hand, MTA took care of eliminating the fear of landlords to lose control of the premises by giving the landlord a solution in the form of compensation[3].

FEATURES OF THE MODEL TENANCY ACT 2019

· The aim of the new draft 2019 Model Tenancy Act is to restrict security deposits on two-month rent and one-month rent on other properties. Though well-intentioned, this limit may hurt landlords in cities where security deposits have been far bigger than the norm. Nor will a two-month security deposit be adequate to reimburse the landlord if significant damage has been done to the property.[4]


· The purpose of the Act is to penalize recalcitrant tenants for not moving from their rental property after the expiry of the rental period negotiated. The landlord would be entitled to claim twice the monthly rent for two months as compensation, and four times the monthly rent afterward. This will put one of the greatest fears of landowners who would not risk leaving their property outside India.


· Upon consent, both the owner and the tenant shall be obliged to contact the leasing authority. This will ensure a landlord does not arbitrarily increase the rent, as opposed to what was agreed in the agreement. It would also mean the landlord won't be evicting the tenant.


· A digital platform will be created to display a tenancy agreement and other documents in the local vernacular language of the State.


· Upon the commencement of this Model Law, a tenant may not, without the prior written consent of the landowner, sublet or transfer all or part of the premises in his possession or assign his rights to the tenancy agreement or any part thereof.


· In the event of any disagreement, the contracting parties shall contact the leasing authority first for a solution. If the parties in dispute are not satisfied with the decision of the rent authority, they may contact the rent court/tribunal to request relief. Those courts will be expected to issue an order within 60 days of receiving the complaint.


· Civil courts will not have jurisdiction over rental housing disputes once rental tribunals are established. 'Except for the jurisdiction of the rental authority, only the rental court and no civil court shall have jurisdiction to hear and determine applications concerning disputes between landlord and tenant.[5]’, states the Act.


· The concept of a 'property manager' has also been introduced in the Proposed Model Act, extending the roles and duties of the property manager.


· The State / Union Territories regulating the implementation of the Proposed Model Act and the current rent control act applicable to the State / Union Territories shall be repealed from the date on which the Proposed Model Law is notified.


· Structural maintenance of rented premises is the responsibility of the landlord. Although the policy notes that both parties are responsible for maintaining the physical health of the rental house, the landlord would be responsible for structural maintenance.

SIGNIFICANCE OF THE ACT[6]

· Private investment in rental housing is projected to provide a fillip to overcome the nation's enormous housing crisis.


· This will promote the creation of adequate rental housing stocks for various income segments of society, including migrants, formal and informal workers, professionals, students, etc., and enhance access to quality rented accommodation, thus facilitating a gradual formalization of the rental housing market.


· The act will provide both landlords and tenants with relief and help remove some of the load from India's overburdened litigation.


· According to the 2011 Census, nearly 1.1 Crore houses were vacant in the country, and renting these houses will complement the 'Housing for All' vision by 2022.


· The goal of the draft is to unlock the potential of vacant homes in India by ensuring transparency and accountability in the current rental system and sensibly balancing the interests of both landowners and tenants.


CONCLUSION

MTA is an inviting advance in rental issues, identifying with any premises. The foundation of the adjudicating authorities will reduce the burden on lower courts in the nation in issues identifying with the tenancy. Notwithstanding, the utilization of the MTA would be fascinating to see concerning what number of states execute MTA because it is just a model and not required for states to embrace it. The Proposed Model Act seems to go some approach to consider the current economic situations concerning the leasing and renting of premises and setting out the rights and commitments of the landowner, inhabitant, and even the project manager if one is delegated. It has also set out a mechanism to ensure the speedy disposal of disputes, by presenting the Rent Authority, Rent Court, and Rent Tribunal. One worry that might be raised via landlords proposing to rent their private premises is the top of the measure of security deposit that might be taken under the concurrence with the inhabitant. For the most part, the security deposit is intended to take care of the expense of any harms caused to the premises by the inhabitant just as a disappointment by the occupant to empty the premises and topping this would not be seen emphatically via landowners.


Furthermore, the Proposed Model Act just covers occupancy and rent of the premises and is quiet on leave and permit game plans. This might be an issue that might be left to the states, for example, Maharashtra, which had accommodated the idea of leaving and permissive and the commitment of the landowner to enlist such understandings secured under the Maharashtra Rent Control Act, 1999. Further, one should consider the disarray that might be brought about by the execution of the Proposed Model Act in the states where explicit lease control acts are now being followed. For instance, Maharashtra has an entrenched lease control act, which has certain arrangements, for example, the exclusion for organizations that have a settled up capital of more than one crore just as different gatherings of substances who are excluded from the arrangements of the lease control act. Given that the Proposed Model Act is right now just a layout proposed for thought, one should hang tight for additional alterations/changes, assuming any, which the states may recommend and the guidelines which each state may outline.


 

Tags:

Comments

bottom of page