Housing and Urban affairs secretary Durga Shanker Mishra, on July 25, 2021, said all states are asked to soon implement the Model Tenancy Act, which was elapsed the union cabinet in June 2021. Also, our several blogs on the subject matter since its announcement in the parliament few year's ago please follow the suits...
Mumbai @ Night - image sources Mumbai Multimedia Studio at Mumbai Central
While positioning the Model Tenancy Act as a reform that may create plenty of demand for rental housing in India, Mishra, however, said that since the tenancy law are prospective in nature, all disputes associated with rent agreements are dealt under the old laws of the respective states. The provisions of this Model Tenancy Act clearly mention that each one disputes associated with existing rent agreements would be dealt under the old laws even after they're repealed, Mishra said. The union cabinet, on June 2, 2021, approved the draft model tenancy law, during a move that's likely to revive India’s rental housing market by effectuating a mess of reforms. “Model Tenancy Act will enable institutionalization of rental housing by gradually shifting it towards the formal market. it's expected to provide a fillip to non-public participation in rental housing as a business model, for addressing the large housing shortage,” the Housing Ministry said, in a very statement.
The government-approved draft that was proposed in 2019, will now be circulated to states, for them to create tenancy laws in line with the central version or amend existing laws to create it compliant to the model tenancy law.
According to a recent report by Knight Frank and Khaitan & Co, titled ‘2021: a replacement Era for Rental realty in India’, the Act will have far-reaching implications for both, the residential and commercial, assets asset classes and would help create a three-tiered regulatory ecosystem for the stakeholders. From a residential standpoint, the report cites that India’s high vacant stock of total residential census houses is brought within the fold of formal rental housing, once the Act is implemented by states and union territories in letter and spirit. Apart from rental housing, the draft law also will promote growth of investment within the sector and provides a lift to entrepreneurial opportunities and innovative mechanisms of sharing of space. The law are going to be applicable prospectively and can not affect existing tenancies. The government expects that the Model Tenancy Act will facilitate unlocking of vacant houses in India’s key housing markets. it's expected to convey a fillip to personal participation in rental housing as a business model for addressing the massive housing shortage.
In March 2021, housing secretary Durga Shanker Mishra had said that the Housing Ministry was likely to present the draft law to the union cabinet ‘in a month or so’, for its approval. “We have received no comments from some states (on the draft act). We are analysing the responses we've got received from another states. We are within the process and that we should be taking the draft law to the union cabinet for approval, in an exceedingly month roughly. By March, it should be through,” the housing secretary said, during a news conference on January 11, 2021.
As the government pursues its ambitious dream to produce ‘Housing for All by 2022’, it unveiled a draft tenancy law, so as to spice up supply within the rental housing segment. The Model Tenancy Act 2019, aims to form renting more lucrative for both, landlords and tenants, by plugging the various gaps that currently exist in policies regulating the rental housing segment.
Addressing a three-day virtual assets and Infrastructure Investors’ Summit organised by industry body NAREDCO, housing secretary Durga Shanker Mishra, on November 25, 2020, said the new Act would release over one crore vacant houses locked within the clutches of the old Act and promote investments into the important estate sector, once it's implemented across states. “This will bring a replacement wave of affordable rental housing”, he said.
The draft model tenancy act may soon become a law, because the centre has told states and other stakeholders that they need time till October 31, 2020, to send their suggestions on the policy document. Meanwhile, the Chandigarh union territory administration has already started the method to implement the model act and has also sought objections from the general public for the identical, till October 31, 2020. Note here that despite the tax benefits offered on rent payment, there have been 11.1 million vacant homes in urban India in 2011 due to serious loopholes in policies whilst the migrant population struggled to seek out decent accommodation. Considering that developers are sitting on huge unsold inventory in major cities of the country nowadays, the amount of vacant homes in urban areas would have risen dramatically, between 2011 and now.
Let us scrutinise how the Model Tenancy Act 2019 aims to repair this problem, so the demand-supply gap is bridged. Model Tenancy Act 2019: Key features The Act has put in situ several measures, by way of tightening regulations and making it lucrative for landlords and tenants, to spice up rental housing. A ‘Rent Authority’ are established under the Model Tenancy Act 2019 On the lines of the Estate Regulatory Authorities that are founded under the Estate (Regulation and Development) Act, 2016, states could founded rent authorities in cities. After its establishment, landlords and tenants would should be present before the authority to urge the rent agreement registered. In its part, the authority would founded a web site, to take care of all the information it receives within the kind of rent agreements.
“No person shall, after the commencement of this Act, let or tackle rent any premises except by an agreement in writing, which shall be told to the rent authority by the owner and tenant jointly, within the form per the primary schedule, within a period of two months from the date of agreement,” reads the policy document.
Rent courts/tribunals to handle disputes under the Model Tenancy Act
In case of any discontent, the contracting parties would first approach the rent authority for an answer. just in case the disputing parties aren't satisfied with the order of the rent authority, they might approach the rent court/tribunal to hunt relief. These courts would should pass an order within 60 days of receiving a complaint. After the rent courts are founded, civil courts would don't have any jurisdiction over disputes regarding rental housing. ‘Only the rent court and no civil court, shall have jurisdiction, except the jurisdiction of the rent authority under Section 30, to listen to and choose the applications regarding disputes between landlord and tenant’, states the Act.
Model Tenancy Law: Provisions that would help landlords
To discourage overstay of tenants - The policy states that tenants would be prone to pay the landlords double the rent for 2 months and 4 times the rent within the consequent months, just in case they stay after expiry of the rental agreement.
To make eviction of tenants easy
Under the model policy, landlords could approach the rent court requesting eviction, if the tenants fail to pay the rent for 2 months in an exceedingly row.
To stop sub-letting by tenants
Without prior permission of the owner, the tenant isn't eligible to sub-let whole or a part of the rented accommodation.
Model Tenancy Law: Provisions that might help tenants
To stop intrusion of the owner - That landlords march into one’s premises as and once they want, could be a common complaint among those living in rented homes. to prevent this from happening, the policy states that landlords must provides a written notice, 24 hours prior to, to go to the premises. Also, they can not make a visit before 7 am and after 8 pm.
To cap deposit demanded by landlords....
In cities like Mumbai, where the Author stays and Bengaluru, tenants need to pay a minimum of a year’s rent, as margin. Landlords in states that adopt the policy wouldn't be ready to ask quite two months of rent, as a deposit.
To regulate increase in rentals by landlords
During the whole rent agreement period, landlords cannot hike the rent, unless something giving them the correct to try to to has been clearly mentioned within the rental agreement. the owner will need to give three months’ notice to the tenant, before increasing the rent.
Landlord to blame for structural maintenance of rented premises
While the policy states that both parties are responsible to keep up the physical health of the rented property, the responsibility of structural maintenance will lie on the owner.
How effective can the Model Tenancy Law be?
However, questions remain over the effectiveness of the model policy, its laudable provisions notwithstanding. Firstly, land could be a state subject and hence, states are absolve to accept or reject the model policy, which has been within the works since the prime minister Narendra Modi-led National Democratic Alliance (NDA) first formed the govt. in 2014. because the rules aren't binding, states would hardly be in a very hurry to embrace it.
“Two years after the launch of the Act, states are still busy fitting authorities under the RERA. Barring some, most are still struggling to be told the ropes,” points out Yusuf Bhandarkar, Founder CEO of Mumbai Multimedia Studio who specialists in drafting and vetting of properties agreements & disputes as well. “Not many countries would show the willingness to adopt the policy, because it involves an excellent deal of labor on their part,” Bhandarkar adds.
Yusuf Bhandarkar +917977231537 Email: info@multimediastudio.net
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