The Ministry of Housing and Urban Affairs (HUA) has drafted a “Model Tenancy Act”, 2019 to regulate renting of premises. As per the draft law, tenants overstaying will have to pay double the rent for two times and four times thereafter. The security deposit to be paid by the tenant in advance will be a maximum of two months’ rent.
The move could provide relief to both tenants and landlords and help take some load off India’s overburdened litigation process. It also has a provision to cap rent rates, and thus check any arbitrary hikes.
The HUA Ministry has put the draft of “The Model Tenancy Act, 2019” in public for some for consultation. Union Finance Minister Nirmala Sitharaman had announced in the Budget that current rental laws are archaic as they do not address lessor-lessee relationships fairly.
Once ready, the new tenancy law will be circulated to State Governments. The existing rent control laws are restricting the growth of rental housing and discouraging the owners from renting out their vacant houses due to fear of repossession.
According to the draft law, a landowner cannot cut power and water supply in case of a dispute with the tenant. The draft Law mandates the landowner to give a notice in writing three months before revising rent. The proposed law also advocates appointing district collector as rent authority and heavy penalty on tenants for overstaying.
As per the draft laws, landlords will also be able to charge rents — to be decided by the respective State Governments — on par with market rates. The law provides that the terms of agreement executed between landowner and tenant, shall be binding upon their successors in the event of the death of the landowner or tenant and in such case, their successors shall have same rights and obligations as agreed in tenancy agreement for the remaining period of the tenancy.
It states that both landlord and tenant will have to submit a copy of rent agreement to the District Rent Authority which will also have the power to revise or fix rent following a request either by landlord or tenant. States, which will be free to adopt the law owing to land being State subject, will be required to constitute rent courts and rent tribunal, it stated.
“In the event of tenant’s refusal to carry out scheduled or agreed repairs, the landowner shall get the repairs done and deduct the amount from the security deposit,” it also stated. If the landowner refuses to carry out the required repairs, the tenant can get the work done and deduct the same from periodic rent. It also stated that a landowner cannot enter the rented premises without 24-hour prior notice to carry out repairs or replacement.
“The Rent Authority may direct for compensation on the person responsible for cutting off or withholding the essential supply. “The Rent Authority may levy a penalty be paid to the landowner or tenant if it finds that the application was made frivolously or vexatiously,” it stated. The Ministry of Housing and Urban Poverty Alleviation had drafted a similar Model Tenancy Bill in 2015, but it never saw the light of the day. Many states have their own laws on rent, but the laws have become archaic over a period of time and failed to serve their purpose. As per Census 2011, nearly 1.1 crore houses were lying vacant in the country and making these houses available on rent will complement the vision of ‘Housing for All’ by 2022.
