Union Cabinet clears Model Tenancy Act

States will have to change rent laws

The Union Cabinet has on Wednesday approved the much-awaited Model Tenancy Act, which is expected to give a fillip to rental housing and property markets across the country.

The Act, the government said, will help overhaul the legal framework on rental housing, enable creation of adequate rental housing stock and enable institutionalisation of rental housing.

The states and Union territories can now adopt the law through fresh legislation or by amending existing rental laws.

As per the Act, the states can set up rent authorities in cities, and landlords and tenants will have to be present before the authority to get rent agreements registered. The Act will also enable setting up of rent courts or tribunals to address rent-related disputes. These courts will have to pass an order within 60 days of receiving a complaint.

Further, the Act has several provisions to safeguard the interests of both tenants and landlords. Tenants will be liable to pay double the rent for two months and four times the rent in the consequent months if they stay after expiry of the rental agreement.

Landlords can approach the rent court asking for eviction, if the tenants fail to pay the rent for two months in a row.

Unless mentioned in the

rent agreement, the landlord cannot hike the rent during the agreement period. The landlord will have to give three months' notice to the tenant before increasing the rent. Further, the landlord will be responsible for the structural maintenance of the property.

Landlords in states that adopt the policy will not be able to ask for more than two months of rent as security deposit.

The Act also stipulates that the tenant cannot sublet the whole or part of the accommodation without the landlord’s permission.

Similarly, landlords need to give a written notice 24 hours in advance to visit the premises. They cannot make a visit before 7 am and after 8 pm.

Naredco president Niranjan Hiranandani said the new law “would make things easier for all stakeholders tenants, landlords

and investors to transact in rental housing."

The model Act will facilitate unlocking of vacant houses for rental housing. "It is expected to give a fillip to private participation in rental housing as a business model for addressing the huge housing shortage,” Hiranandani said.

The new act would bring in over 11 million vacant urban houses into the rental market and help address the country's massive housing shortage, said Pankaj Bhansali, COO, Eqaro Guarantees, a surety solutions provider.

Samantak Das, chief economist and headresearch & REIS, JLL, a global property consultant, said, "The Model Tenancy Act is going to give a guiding framework to all states to make their respective tenancy Acts contemporary. Current Acts will give way to the new ones where uniformity will prevail.”