Cabinet approves Model Tenancy Act for adoption by states and union territories
04 June 2021
The union cabinet chaired by Prime Minister Narendra Modi on Wednesday approved the Model Tenancy Act, which is expected to help overhaul the legal framework with respect to rental housing across the country and spur overall growth of the housing sector.
The Model Tenancy Act, which will provide a model for urban and rural properties, as well as a template for residential and commercial properties, will be circulated among all states and union territories for adaptation through enactment of fresh legislation or suitable amendment of existing rental laws.
The MTA provides for specific contract arrangements between landlord and tenant. It also provides for a rent authority to resolve any dispute between landlord and tenant, or a rent court that would offer speedy resolution, according to the ministry of housing and urban affairs.
A tenant will have to submit a security deposit of two months for residential premises while for commercial property, the security deposit has been fixed at six-month rent.
The tenant cannot sublet a part or whole of the property to someone else.
Further, the Act says if a landlord has fulfilled all the conditions stated in the rent agreement - giving notice period, 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.
Under this Act, the landowner would give a notice in writing three months before revising rent. The landlord cannot hike the rent in the middle of the tenure.
According to the MTA Act, a landowner cannot cut power and water supply in case of a dispute with the tenant.
The Act states that a landowner cannot enter the rented premises without 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.
The Model Tenancy Act aims at creating a vibrant, sustainable and inclusive rental housing market in the country. It will enable creation of adequate rental housing stock for all the income groups thereby addressing the issue of homelessness. Model Tenancy Act will enable institutionalisation of rental housing by gradually shifting it towards the formal market.
The MTA will facilitate unlocking of vacant houses for rental housing purposes. It is expected to give a fillip to private participation in rental housing as a business model for addressing the huge housing shortage.