The Finance Minister of India, Nirmala Sitharaman, had addressed the existing rental laws in the initial part of her Union Budget speech. That was followed by the Ministry of Housing and Urban Affairs coming out with the Model Tenancy Act, 2019 draft. Open to public feedback till the 1st of August, the draft aims to rework the existing systems that end up benefiting tenants and landlords alike.
What the Act States and Proposes
According to the data provided by the government, there are about 1.1 crore premises that lie vacant in urban regions. Many of the landlords do not make their apartments available for rent as they are fearful of the tenants usurping their properties once they are rented out. This new proposal is in hope of making those properties available for the masses to take them up on rent.
Drafted keeping in mind both tenant and landlord rights, the draft also envisions giving structure to an adjudicating procedure that ensures quick redressal of disputes, and establish a Rent Court and Rent Tribunal at the state levels. Apart from that, the draft has also proposed to establish a Rent Authority, which can be appointed by the District Collector.
The Model Tenancy Act 2019 has made it mandatory to make written house rental agreements that need to be registered with the proposed Rent Authority by both parties within the time span of 2 months. The Rent Authority will then ensure that it provides a unique identification number to both the parties and also upload all the details of the tenancy agreement on its website.
Important Aspects to be Aware of
What’s more important is that the Act deals with one the most variable elements of rental housing market – Rent! As per the draft, the fixation and the revision of the rent will be regulated in accordance with the tenancy agreement. In case the rent has not been stipulated in the agreement, the notice for the rent revision has to be provided in advance of a minimum of three months to the tenant with regards to the date it becomes due on.
The landlord, however, can incur any expenditure occurred on the improvement of the premise by increasing the rent, all the while ensuring the consent of the tenant.
As per the draft of the Model Tenancy Act 2019, the security deposits that the tenants are needed to pay, as determined by the house rental agreement as agreed upon by both parties, can be a maximum of not more than two months’ rent. This shall be the case if the property is residential; in the case of non-residential properties, a month’s rent is the least you can be charged as the security deposit.
The new policy also aims at addressing the captious issue of maintenance work which is a grey area in many apartments for rent.
It has been clearly clarified in the draft that if the landlord does not carry out scheduled repairs or ones that are agreed upon, the tenant can get those repairs done themselves and deduct the same from their rent payment. It also works the other way round, as in when the tenant is needed to get any repairs and fails to do so, the landowner can also deduct the same amount from the security deposit.
Irregularities in Payment/Acceptance of Rent
With respect to the rent payment, the Act has stated that if the tenant fails to pay up for the rent of two months, the owner can then approach the tribunal. The tenant will be given one month after the matter has been received by the authority to pay his dues. If the tenant fails to do so, the landlord has the right to evict them.
If within the two months the landlord refuses to accept the rent, the tenant can very well deposit the amount to the Rent Authority which will begin with an investigation of the matter and then pass an order on it. If accepted, the policy will have to go through to the states and the state are free to either adopt or reject it. It would work this way since the land is a state subject.
The Model Tenancy Act 2019 has much to state; hence, it has much to work on. Whether you are a landlord or a tenant, it is advisable to stay updated with the Act in the times to come.