Model tenancy bill: Rental incomes may get a fillip

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Published: July 31, 2019 1:44:34 AM

The archaic tenancy laws keep rents low, which then prevents owners from spending money on maintenance of buildings.

Existing rent control laws are restricting the growth of rental housing segment and discouraging the owners from renting out their vacant premises.

The draft Model Tenancy Act, 2019, issued by the ministry of housing and urban affairs, is likely to reduce the trust deficit between owners and tenants, and help release housing stock for rental purpose and modernise the rental home ecosystem.

Existing rent control laws are restricting the growth of rental housing segment and discouraging the owners from renting out their vacant premises. The archaic tenancy law keeps rents low, which then prevents owners from spending money on maintenance of life-threatening old structures, like the recent collapse of a 100-year-old building in Mumbai’s congested Dongri locality, killing 11 people and injuring several.

Rent authority

The draft says any person who is taking a house on rent or letting out his house will have to get an agreement made in writing and jointly inform the rent authority, which will be an officer not below the rank of deputy collector of the area. In cases where the landowner and the tenant fail to jointly present a copy of the tenancy agreement, the property owner and the tenant will separately file the particulars about tenancy within a period of one month from the date of expiry of the period.

The rent authority will have to put in place a digital platform in the local vernacular or state language for enabling submissions of document within three months. The rent authority, after receiving the information about the tenancy, will provide a unique identification number to the parties and upload the details of the tenancy agreement on its website within seven days from the date of receipt of tenancy agreement along with prescribed documents.

Period of tenancy

All tenancies entered into after the commencement of this Act will be for a period as agreed between the landowner and the tenant and specified in the agreement. The tenant may approach the landowner for renewal or extension of the tenancy within the period agreed to in the agreement. The draft says that if a tenancy for a fixed term ends and has not been renewed and the property is not vacated, then the tenancy will be deemed to be renewed on a month-to-month basis on the same terms and conditions as were in the expired tenancy agreement for a maximum period of six months.

Rent payable

The revision of rent between the landowner and the tenant will be as per the terms set out in the tenancy agreement. The landlord will give a notice in writing three months before the revised rent becomes due. If a tenant, who has been given a notice of the rent increase, fails to give the notice of termination of tenancy to the owner, in such case the tenant will be deemed to have accepted the revised rent.

The rent authority, on an application by the owner or the tenant, will fix or revise the rent and other charges payable and also fix the date from which the revised rent becomes payable. The security deposit has been fixed at two months’ rent in case of residential property amd one month’s rent in case of non-residential property.

If the owner does not accept the rent and other charges payable or refuses to give a receipt, the rent will be sent through postal money order for two months. And if the owner does not accept the rent within this period, then the tenant can deposit the amount with the rent authority. On deposit of the rent, the authority will investigate the case and pass an order based on the facts.

Maintenance and repair

If the premises becomes uninhabitable and the owner refuses to carry out repairs, then the tenant can vacate the premises and handover possession after giving 15 days notice in writing or with the permission of the rent authority. The owner or the property manager may enter the premises after giving a written notice or through electronic medium at least 24 hours before the time of the entry to carry out repairs or replacement or inspect the premises.

Repossession of the premises

An eviction notice can be given only when the owner and the tenant have failed to agree to the rent payable or if the tenant has not paid the full rent for two months including interest for delayed payment. However, no eviction order will be issued to the tenant if he makes payment within one month of notice being served. If the tenant has continued to misuse the premises even after receipt of notice from the owner, then the tenant can be issued an eviction notice.

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