- Commercial Law Advisors
Model Tenancy Act approved for circulation to the State / Union Territories
The Union cabinet, in a statement dated 02 June 2021, approved the Model Tenancy Act to be circulated to States and Union Territories to enact legislations or amend the existing rental laws suitably. The Housing and Urban Affairs ministry floated the draft Model Tenancy Bill in 2019, for discussion and feedback from public and stakeholders. It proposed to establish an independent authority in every State and Union Territory for registration of tenancy agreements and a separate rent control authority to take up tenancy related disputes. The Model Tenancy Act aims to revamp the existing legal framework and to provide an overall regulatory framework to the rental and housing sector.
The key highlights of the Model Tenancy Act are:
The Model Tenancy Act will be applicable prospectively and will not affect the existing tenancies.
The Model tenancy Act will create adequate rental housing stock for all the income groups and accordingly address the issue of homelessness.
In case of dispute between landlord and tenant, the rent authority would be available for speedy resolution.
The Model Act makes it mandatory for a written agreement between the owner and the tenant. Also, the written agreement is to be submitted to the rent authority and a digital platform will be set up in the local vernacular language.
The model act will balance the interest and rights of both the landlord and tenant in an accountable and transparent manner.
A tenant will have to submit a security deposit of two months for residential premises and six months’ rent for commercial property.
Without prior permission of the landlord in writing, the tenant will not be eligible to sub-let whole or part of the premises to any third party.
A landowner is entitled to get compensation of double of the monthly rent for two months and four times of the monthly rent thereafter from the tenant who does not vacate the premises after the termination of tenancy agreement.
Under the present Model Act, the landowner shall give a notice in writing three (3) months before revising rent.
The Act states that a landowner cannot enter the rented premises without a twenty-four (24) hour prior notice to carry out repairs or replacement.
Landlord will be responsible to repair structural damages and undertake measures like whitewashing walls and painting doors and windows.