The Union Cabinet chaired by Prime Minister Narendra Modi cleared the Model Tenancy Act on Wednesday.
The Act will be circulated to States and Union Territories for adaptation by way of enacting fresh legislation or amending existing rental laws suitably.
According to a government notification, the Model Tenancy Act ""will enable institutionalisation of rental housing by gradually shifting it towards the formal market.""
""It will enable creation of adequate rental housing stock for all the income groups thereby addressing the issue of homelessness,"" added the notification.
The revised act empowers landlords, tenants and also defines the roles and responsibilities of property manager (real estate brokers). It also stipulates the formation of Rent Courts and Rent Tribunals for dispute redressal.
The Model Tenancy Bill detailed five key announcements for tenants and landlords.
1. Security Deposit: The Security Deposit as mutually agreed between Landlord and tenant for residential housing is capped at two months of rent. In the case of non-residential property, it is capped at one month of rent. The landlord will refund security deposit at the time of taking over possession of vacant premises from the tenant.
2. Hike / Revision in Rent: To hike the monthly rent, landlords will have to give written notice three months in advance. Also, Landlords cannot increase rents during the middle of a rental term.
3. Tenants failing to vacate premises: Landlords can claim double the rent for two months and four times of monthly rent as compensation in the eventuality of tenants failing to or refusing to vacate premises at the end of a rental term.
4. Rental Agreement: Lessors and Lessees will not be able to rent premises without an agreement in writing. A Rent Authority will issue a Unique Identification number after receipt of the rental agreement. The authority should be informed about the agreement within seven days.
5. Formation of Rent Authority, Rent Court and Rent Tribunals: The Model Tenancy Act also deliberates on the formation of Rent Authority, Rent Court and Rent tribunals as agencies to resolve dispute between aggrieved parties. The District Collectors with the previous approval of State & UT governments are empowered to appoint officers (not below rank of Deputy Collector) as Rent Authority to the area under their jurisdiction.
The Ministry of Housing & Urban Affairs tweeted after the cabinet decision. The tweet reads, ""As per Memorandum of Understanding (MoU) signed by States/UTs under @PMAYUrban, they would either legislate or amend existing rental laws on the lines of MTA.""
After enforcement of this Act, no person shall let or take on rent any premises except by an agreement in writing. For more details about the Model Tenancy Act, please click this link (ministry website).
The Union Cabinet approved the Model Tenancy Act (MTA) for adoption and enactment by states/UTs to promote rental housing in India.
— Ministry of Housing and Urban Affairs (@MoHUA_India) June 2, 2021
MTA envisages to balance the interests and rights of both the owner and tenant in accountable and transparent manner. pic.twitter.com/rbP9lkkIE7
Disclaimer: Lead image is attributed to TierraMallorca via Pixabay.