New Delhi: After dilly-dallying for over four years, the Narendra Modi government Wednesday came out with a draft model tenancy law.

The draft law proposes to set up an independent authority in every state for the registration of all tenancy agreements, and a separate court for resolving tenancy-related disputes. It also has a provision to cap rent rates, and thus check any arbitrary hikes.

However, the proposed legislation is a ‘model act’ because land is a state subject. “States will have the option of adapting or rejecting it,” a senior housing ministry official told ThePrint on the condition of anonymity.

The move could provide relief for both tenants and landlords and help take some load off India’s overburdened litigation process.

What the draft law envisions

The rent authority will be headed by a deputy collector-rank officer, and will be set up by district collectors with the approval of the respective state governments. The authority will set up a website where the details of all agreements will be put up.

It will be mandatory for both the landlord and the tenant to inform the rent authority after getting into an agreement. This will ensure that a landlord does not arbitrarily increase the rent in variance with what has been agreed to in the agreement. It will also ensure that the tenant is not evicted at the whim of the landlord, the ministry official explained.

The proposed act will also safeguard the interests of the landlord by ensuring that a tenant does not ‘squat’ on the property against the terms of the agreement. Landlords will also be able to charge rents — to be decided by the respective state governments — on par with market rates.

All disputes will be heard at rent courts that states will have to set up. Civil courts will no longer hear such cases, as it happens now. At present, thousands of rent-related disputes are pending in courts across India.

A long-awaited law

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. PM Modi had spoken elaborately about bringing in a model tenancy act.

But now, ministry officials say the draft law could unlock a large number of rental stock. “Property owners won’t be apprehensive about renting out their premises,” said the official quoted above.

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.

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