Model Tenancy Act 2019; find out how it will impact you

The Model Tenancy Act 2019 not only clarifies tenancy rules but also promises to open up new housing and business opportunities in the rental property market.

Model Tenancy Act 2019; find out how it will impact you

The Union Cabinet has approved the Model Tenancy Act 2019 on 2 June 2021 and proposed its adoption by all states and union territories. While adopting the law, the states and UTs will have to set up rent authorities, courts, and tribunals in every district. Further, they can adopt the law by making new legislations or through amendments to existing rental laws. 

The law is expected to bring about a complete makeover of the legal framework regarding renting of housing properties in India, covering properties rented out for residential, commercial, and educational purposes. The government also expects that it will encourage private participation in the rental market in the form of a business model. This law aims to make vacant houses economically productive, foster more transparent owner-tenant relationships, and reduce litigations and disputes.

The Minister of Housing and Urban Affairs, Hardeep Singh Puri, stated that the law will help the government to position rental housing as a solution to the government’s vision of ‘housing for all’ by 2022. Notably, there are over 1.1 crore unoccupied houses in the country, and they can add up to meet the national housing target. Fear among house owners about illegal occupation is a major factor for such a large number of homes lying vacant. The minister further said that the law will help to resolve the issue of homelessness by opening up rental spaces for all income groups.

The first draft of the Model Tenancy Act was released in 2019. This draft aimed to clearly define the rights and obligations of homeowners and tenants, and reduce the trust deficit and confusion that shrouded the rental accommodation market. 

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Who will be in charge of the rent authorities, courts, and tribunals?

The states and UTs will be able to appoint district judges and additional district judges in district Rent Tribunals, after consulting the jurisdictional high court. A Rent Court will oversee the appointment of additional district collectors, additional district magistrates, or an equivalent officer. The Rent Authority will be a deputy collector ranked officer, appointed by the district collector or district magistrate with the state administration’s approval.

What are the key features of the Model Tenancy Act 2019?

The key features of the Act are listed below:

  • Security deposit collected from the tenant will be limited to two months’ rent for residential let-outs and six months’ rent for non-residential properties. 
  • If the tenant fails to vacate the property as per the notice period, they will have to pay double rent for the next two months, and four times thereafter.
  • Discontinuance of the tenancy has to be communicated and agreed upon in writing.
  • The owner or property manager cannot withhold essential supplies and utilities from the tenant under any circumstances.
  • The tenant cannot build any permanent structure or make structural changes without the written consent of the owner.
  • The tenant cannot sublet the property or part thereof.
  • Revision of rent must be intimated three months in advance and in writing by the owner.
  • The owner has to give 24-hour notice to carry out repairs and maintenance.
  • Dispute between tenant and owner can be speedily resolved through rent court, authority, and tribunal.

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What will be the property maintenance responsibility under the new Act?

Unless the tenancy agreement indicates otherwise, the owner will be responsible for structural repairs (except when the damage is caused by the tenant), painting of doors, windows, and walls, changing pipes and plumbing, internal and external wiring, and maintenance related to the same. The tenant will ensure drain cleaning, repair of switches and sockets, repair of kitchen fixtures, replacing door and window glasses, garden and open space maintenance etc. Buying a home in your hometown or in a big city: What makes financial sense?

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