alisha | 14 Dec 2020

Government To Soon Come Up With Model Tenancy Law In Rental Housing

Government To Soon Come Up With Model Tenancy Law In Rental Housing

The Housing and Urban Affairs Secretary Mr. Durga Shanker Mishra announced the Model Tenancy law while addressing a webinar organized by realtors body NAREDCO (National Real Estate Development Council).

Draft of the Model Tenancy law floated earlier in July 2019 when the housing ministry had approached Cabinet for the law's approval.

This initiative is aimed at boosting the real estate sector by introducing guidelines to the rental housing segment to make it transparent.

Mr. Durga Shanker Mishra in the webinar said, "Model Tenancy law is ready. It has been translated into various languages as it has far-reaching implications. The deadline for feedback on the proposed model tenancy law ended on 31 October and now States have been asked to send those feedbacks after compiling it".

What is the purpose of Model Tenancy Law?

Currently, many loopholes exist concerning the regulation of the rental housing segment. The government aims to bring transparency and fairness to this segment of real estate. The Model Tenancy Law will protect the interest of both tenants and landlords.

Secretary Mr. Mishra referred to the Census 2011 report and said, "The resurgence of real estate was necessary. There are 1.1 crore vacant homes in the country as people fear to give their homes on rent. The Model Tenancy Law will eliminate this fear and give a boost to the real estate sector. There are big business opportunities in rental housing".

Under this law, the government proposes to establish rent courts and rent tribunals to hear appeals and matters related to rental housing and ensures speedy redressal of disputes. While this law is sure to bridge the trust deficit between tenants and landlords, it will also help students, working professionals, and other migrants to find rented accommodation easily and in a sorted manner.

Introducing laws in the rental housing segment will enable people to trust more in property investments. They will experience a hassle-free return on investment and financial security from the spaces they will put on rent. 

An excerpt from the policy document states as “No person shall, after the commencement of this Act, let or take on rent any premises except by an agreement in writing, which shall be informed to the rent authority by the landlord and tenant jointly, in the form specified in the first schedule, within a period of two months from the date of agreement".

How will the law benefit tenants and landlords?

Some of the points from Model Tenancy Law are highlighted below that are in favour of both landlords and tenants:

The Model Tenancy Law discourages the overstay of tenants. It allows landlords to charge tenants double the amount of the actual rent if found staying after the expiry of the rental agreement. If tenants are found to have failed to pay the rent for two consecutive months, landlords have the right to approach rent court and ask for eviction of the tenants. In the case of subletting a part or whole of the rented place, tenants will have to take prior permission from the landlord.

For tenants, the policy ensures more safety and privacy. Landlords cannot enter the premises of tenants as and when they want. A written notice of 24 hours in advance should be given to the tenants to visit the premises. Adopting this policy means landlords cannot ask for more than two months of rent as a security deposit. While the physical health of the rented property can be a shared responsibility between landlord and tenant, structural maintenance will be the landlord's sole responsibility. It is also often observed that landlords often hike the rent without prior notice to the tenants. As per this policy, landlords cannot hike the rent during the entire rental agreement period. Terms and conditions will have to be clearly mentioned in the rental agreement.

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