Union Cabinet approves Model Tenancy Act: All you need to know
The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved the Model Tenancy Act. the government has asked for its circulation to all states/union territories for adaptation by way of enacting fresh legislation or amending existing rental laws suitably.
The government had first released the draft of the act in 2019. It aims to bridge the trust deficit between tenants and landlords by clearly delineating their obligations.
In a release, the central government said that the Model Tenancy Act will facilitate unlocking of vacant houses for rental housing purposes. It is expected to give a fillip to private participation in rental housing as a business model for addressing the huge housing shortage, the government further said.
Here are the salient features of the act:
- The government said that the Model Tenancy Act aims to create a vibrant, sustainable and inclusive rental housing market in the country. It will enable creation of adequate rental housing stock for all the income groups thereby addressing the issue of homelessness.
- The act will enable institutionalisation of rental housing by gradually shifting it towards the formal market, it further said.
- The Model Tenacy Act talks about establishing a rent authority to regulate renting of premises and to protect the interests of landlords and tenants. The proposed authority will also provide speedy adjudication mechanism for resolution of disputes and matters connected therewith or incidental thereto, according to the act.
- It also puts a cap on the amount of security deposit - usually a bone of contention between landlords and tenants - to a maximum of two months of rent in case of residential premises and six months in case of non-residential premises. Currently, this amount differs from one city to another. For instance, in Delhi, the deposit is usually two-three times the monthly rent, but in Mumbai and Bengaluru, it can be over six times the monthly rent.
- Another crucial point where the act has provided a mechanism, is vacating the premises. The Model Tenacy Act says that if a landlord has fulfilled all the conditions stated in the rent agreement - giving notice etc - and tenant fails to vacate the premises on the expiration of the period of tenancy or termination of tenancy, the the landlord is entitled to double the monthly rent for two months and four times after that.
- Every landlord or the property manager may enter the premises let out on rent after serving a notice, in writing or through electronic mode, to the tenant at least twenty four hours before the time of entry under the following circumstances, the act states.
- It has further described in detail the rights and obligations of both landlord and tenant, and has also dealt with many issues which can lead to disputes between the two parties.