Most of the time, the rent laws have been considered pro tenants. Given the scope of the rental property market and the boost it provides to the economy, it becomes all the more necessary to dispel the myths and increase the rent laws’ transparency. It will help gain the confidence and trust of the landlords and tenants, both Indians and NRIs, and reduce the chances of disputes among the parties.
The Model Tenancy Act aims to make tenancy easy and manageable by the NRIs. This Act hopes to help the landlords unlock their rental accommodations inventory, which will further rationalize the price structure in the rental property market.
Any piece of legislation may not be perfect but should aim for workability and positive outcomes. The Model Tenancy Act has a socio-economic purpose. The announcement of the new Act has revealed the intentions of the Government of India that it is serious about real estate business and growth. The Act is also in line with the Government’s aim to achieve a target of housing for all by 2022. The Act has come timely as many residential sector units are lying vacant, and there is a need to create willingness among buyers for their sale and occupancy.
There is no doubt that the Real Estate Sector is a significant component of the growth of the Indian economy. Rent laws have a direct impact on the real estate housing sector. The authorities have recognized the need to make the tenant laws more regulated and transparent. It is appreciable and is a positive step towards a prosperous Indian economy.
Table of Contents
Model Tenancy Act
As an NRI, who would not like to contribute significantly to the growth of their country? The Model Tenancy Act facilitates such an opportunity. It will give a push to the investment decisions of NRIs.
Model Tenancy Act features which are commendable
- The Act makes it mandatory to have a written agreement in place. It helps to remove ambiguity, and adherence to the terms and conditions becomes easy. It creates more awareness about the rights and duties of the parties to the rent agreement.
- Under the new law, the parties will submit the rent agreement to the concerned authorities to be saved on a digital platform.
- Dispute resolution is faster – Regular civil courts will not entertain the disputes. Rent Authority, Rent Court, and Rent tribunal will be separate authorities dealing with tenancy dispute matters. It will lead to speedy disposal of the cases. A time period has been fixed under the Act to decide the disputes.
Recommended reading: Evict a Tenant
A landlord has a reason to be happy
- If the tenant refuses to leave once the tenancy period is over as per the agreement or after the termination of tenancy by order or notice, there is a heavy penalty. Rent will be doubled for the first two months, four times for another two months, and six times for the next two months.
- A tenant is not allowed to make structural changes or sublet without the consent of the landlord. There will be a separate agreement for subletting with the landlord’s consent. It will also be submitted to the authority for saving on to a digital platform.
- A landlord is assured that his property is under-occupancy for a certain period, and there will be a flow of regular income for this period as the terms of the agreement binds the tenant.
Tenant is also secured
- The security deposit cannot exceed two months’ rent. In some states, it is found that landlords are charging `10-12 months’ rent as the security deposit.
- A landlord cannot evict the tenant at his free will. Eviction has to be as per the process of law. It will protect the tenant from any harassment by the landlord and bring stability and security.
- A tenant is also protected against the arbitrary increase of rent by the landlord. The rent can be increased as per the agreed terms and conditions.
- There is a clear demarcation of the landlord’s and the tenant’s responsibilities. A tenant has to undertake minor repairs on his own, as provided in the schedule. All the major maintenance and repair is the landlord’s responsibility.
- A landlord cannot enter the premises of the tenant without notice at any hour of the day, unless the relations of the parties permit the same. The Act aims to protect the privacy of the tenant.
The Model Tenancy Act is an attempt to balance the landlord and tenant’s rights and duties.
Recommended reading: Gift Deed
How the Model Tenancy Act helps
The businesses don’t grow in an atmosphere of fear and insecurity. It is vital to remove any apprehension from the minds of NRIs of losses from rented property. NRIs are primarily interested in investment in real estate as it has many financial prospects for them. Indian economy is witnessing a demand for ready-to-move residential accommodations, and with laws like RERA, the developers are also now bound to deliver the possession in time.
Transparent tenancy law is beneficial for both the landlord and the tenant as it will instill confidence in rental property market players and fill the gap between supply and demand.
The new Act aims to make tenancy easy and manageable by the NRIs. With the digitalization of agreements, the rental sector will become more organized and well-regulated. A separate dispute resolution system will speed up the process and provide a relatively rapid adjudication of matters.
Most of the NRI landlords manage the rented property through their near and dear ones here in India. They do not visit the properties frequently. For NRIs, it is always better if the tenancy laws are transparent and assure strict compliance of terms and conditions of the rent agreement by the tenants. It makes a big difference while making an investment decision if there is something to take care of unnecessary harassment at the hands of notorious and stubborn tenants. It reduces the insecurity and uncertainty in the rental property market.
Recommended reading: Vital points – NRI Landlord to evict a tenant in India
Around 1.1 crore properties fit for renting are lying vacant in India as per a government survey. One of the prime reasons is weak tenancy laws. The Model Tenancy Act hopes to help the landlords unlock their rental accommodations inventory, which will further rationalize the price structure in the rental property market.
FAQs Model Tenancy Act
There will be a separate three-tier system, Rent Authority, Rent Court and Rent tribunal, separate from regular civil courts, to decide the rent matters in a fixed time limit.
A landlord cannot enter the house of the tenant at any time. It must be with a prior notice.
Yes, it is now mandatory. Earlier both verbal and written agreements worked.
The landlord cannot act arbitrarily. The security deposit cannot exceed two months’ rent.
Rent will be doubled for the first two months, four times for another two months, and six times for the next two months.
There is a clear demarcation of responsibilities. All the major maintenance and repair is the landlord’s responsibility.
A tenant has to undertake minor repairs on his own, as provided in the schedule.
The two main features of the new Act are, firstly it is mandatory to have a rent agreement in writing which will be saved on a digital platform and secondly, the dispute resolution is faster.
There is a need to bring transparency in the rent laws in India which are considered pro-tenant.
The rent agreement is to be submitted to Rent Authority headed by Deputy Collector.