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Governance

Model Tenancy Act

  • 03 Jun 2021
  • 4 min read

Why in News

The Union Cabinet has approved the Model Tenancy Act to be sent to the States and Union Territories to enact legislation or amend laws on rental properties.

  • The draft Act had been published by the Ministry of Housing and Urban Affairs in 2019.

Key Points

  • Some Provisions:
    • Written Agreement is Mandatory:
      • Mandatory for there to be a written agreement between the property owner and the tenant.
    • Establishes Independent Authority and Rent Court:
      • Establishes an independent authority in every state and UT for registration of tenancy agreements and even a separate court to take up tenancy related disputes.
    • Maximum Limit for Security Deposit:
      • Limit the tenant’s advance security deposit to a maximum of two months rent for residential purposes and to a maximum of six months for non-residential purposes.
    • Describes Rights and Obligations of both Landlord and Tenant:
      • The landlord will be responsible for activities like structural repairs except those necessitated by damage caused by the tenant, whitewashing of walls and painting of doors and windows, etc.
      • The tenant will be responsible for drain cleaning, switches and socket repairs, kitchen fixtures repairs, replacement of glass panels in windows, doors and maintenance of gardens and open spaces, among others.
    • 24-hour Prior Notice by the Landlord:
      • A landowner will have to give 24-hour prior notice before entering the rented premises to carry out repairs or replacement.
    • Mechanism for Vacating the Premises:
      • If a landlord has fulfilled all the conditions stated in the rent agreement - giving notice etc.- and the tenant fails to vacate the premises on the expiration of the period of tenancy or termination of tenancy, the landlord is entitled to double the monthly rent for two months and four times after that.
  • Coverage:
    • It will apply to premises let out for residential, commercial or educational use, but not for industrial use.
    • It also won’t cover hotels, lodging houses, inns, etc.
    • It will be applied prospectively and will not affect existing tenancies.
  • Need:
    • As per Census 2011, nearly 1.1 crore houses were lying vacant in the country and making these houses available on rent will complement the vision of ‘Housing for All’ by 2022.
  • Significance:
    • The authority will provide a speedy mechanism in resolving disputes and other related matters.
    • It will help overhaul the legal framework with respect to rental housing across the country.
    • It will enable creation of adequate rental housing stock for all the income groups thereby addressing the issue of homelessness.
    • It will enable institutionalisation of rental housing by gradually shifting it towards the formal market.
    • It is expected to give a fillip to private participation in rental housing as a business model for addressing the huge housing shortage.
  • Challenges:
    • The Act is not binding on the states as land and urban development remain state subjects.
    • Like in the case with RERA (Real Estate (Regulation and Development Act), the fear is that states may choose not to follow guidelines, diluting the essence of the Model Act.

Source: PIB

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