The recent judgment of the Supreme Court wherein it proposed model guidelines for the landlord-tenant agreement, allowing owners of commercial and residential buildings to revise rentals every three years; can only be fully effective if backed by similar amendments in the rental Act.
Since Rent Control Act is a state subjects, state governments would need to make the requisite amendment so that the lease agreements can be drafted accordingly to allay the fear of the landlords of not getting the market rent.
Corporate lawyers FE spoke to said that though the SC order is a step in the right direction and will end the ongoing disputes, amendments in the Rent Control Act will ensure that disputes don’t land every time in the courts. ?This will definitely help the landlord-tenant disputes but its clear impact will only be felt once the states amend their state rent control Acts,? said Sangram Patnaik, managing partner of law firm Patnaik and Associates.
Manish Kumar of MK and Associates agrees, ?There are cases where it is found that tenants were occupying the property by paying rent at a rate determined 20-25 years ago or even more and did not agree to pay rents as per the current market rates. Here the landlords were suffering as they were actually not even realising the value he had to pay towards various taxes. It was also seen that the landlord-tenant disputes were increasing and since judiciary was taking time to resolve these cases, the landlords were succumbing to the tenants or were selling their property at below market prices. If the law is amended it will conclusively end such disputes”.
The need for change in the law is best illustrated in the case of Delhi where the state government decided to make amends in the Act in the 90s but at the last moment did not notify it due to hectic lobbying by the traders? lobby. Real estate analysts also said that the proposed model is the best opportunity to not only resolve the pending issues but also improve property and rental market dynamism.
According to the judgment, ?if the present and prevalent market rent assessed and fixed between the parties is paid by the tenant, the landlord shall not be entitled to bring any action for his eviction against such a tenant at least for a period of five years. Thus, for five years the tenant shall enjoy immunity from being evicted from the premises.?
It said: ?The tenant must enhance the rent according to the terms of the agreement or at least by 10% after every three years. If the rent is too low in comparison to the market rent having been fixed almost 20 to 25 years back, then the present market rate should be worked out.?
