Cabinet nod for model tenancy law; Act to serve both owners and tenants

NEW DELHI: More than six years after it was first mooted by the Centre, the Union cabinet on Wednesday approved the Model Tenancy Act which aims to protect the interests of both tenants and landlords.
The government expects this model law, which states can adopt and enact, will open up a large number of residential and commercial properties for rental purposes as the legal framework will eliminate the fear of owners losing their properties.
While announcing that states have the option to adopt the policy, housing and urban affairs minister Hardeep Singh Puri said he expects BJP-ruled states to roll it out and that other states would also do so as it benefits the common man. He said the policy, once notified by the states, will cover urban and rural areas. The model law lays out the norms for establishing separate rent authorities, courts and tribunals in every district to protect the interests of owners and tenants.

The model Act says that the rent and duration of tenancy will be fixed by mutual consent between the owner and tenant and there has to be a written agreement. It suggests that the security deposit for residential properties won’t be for more than two months’ rent and for commercial properties, it can’t be more than that of six months.
For revision of rent, landlords need to give a written notice three months in advance and the new rent will be on mutual consent. To protect landlords, it suggests that if a tenant does not vacate the premises after the tenancy expires, the landlord will be entitled to compensation, which will be double the monthly rent for two months and four times the monthly rent after that.
Similarly, the landlord can’t forcefully evict the tenant during the agreed contract period. The landowner has to approach the Rent Court for this by submitting a complaint of any default on the part of the tenant or if there is a bona fide requirement of the property by the legal heirs of the owner after his death.
Since the law will be applicable for prospective contracts, owners of prime commercial properties in Delhi, Mumbai and Kolkata, who had rented out properties decades back and have been getting peanut rentals, won’t get any benefit. Responding to a question whether the model law has been prepared considering the political implications it would have had if such properties were also covered, Puri said, “The law is aimed at dealing with vacant houses. We are not touching pagdi tenants.”
According to the model law, all disputes would be heard at rent courts that states will have to set up and the cases will have to be disposed of in 60 days.