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What is Model Tenancy Act - LawSimpl

What is Model Tenancy Act

Model Tenancy Act, 2021

There arises a question of doubt as to why form a separate Tenancy Act, while people are residing in rental properties for years now. This is because in recent times it has been observed that the landlords started dis-investing in rental properties and even the tenants showed aversion in staying in rental properties. When the problem was analyzed, it was observed that the landlords had to suffer a lot when the tenants refused to pay rents, or would not vacate the property which then led to years of fight in the courts and extravagant costs of litigation were to be borne. On the other hand, the tenants too were exploited by the landlords in terms of an increase in rent without any notice and charging irrelevant expenses under the repairs and maintenance without their consent. And due to this situation, it was observed that around 1.1 crore houses were lying vacant according to the housing survey of 2011.

To curb this, the Central Government came up with a uniform Model Tenancy Act, in which it was made mandatory for both the landlord and the tenant to get into a ‘rent agreement’ which includes all the details such as the amount of rent, tenure of stay, termination, default on payment, security deposit, repairs, and maintenance, etc, and the same would then be submitted to a ‘Rent Authority’. 

Every state needs to establish a 3-tier quasi-judicial body including a rent authority, rent court, and a rent tribunal. Although the laws related to housing and rent comes under the state list as per the Indian Constitution, hence this act is a model offered to the states to implement it as they deem fit.

This act is drafted for the benefit of both the landlords and the tenants, and in addition to this, this act will also fulfill the target of the Government under the PMAY (Pradhan Mantri Awas Yojna) scheme to provide housing to every citizen in this country.

Key features of the Act:

1. Rent Agreement: This act states that a written agreement is a prerequisite to be signed by both the landlord and the tenant. The agreement should include the rent amount, the period for the tenancy, notice period for revision of rent, the security deposit to be paid in advance, reasonable causes for entry of landlord into the premises, and responsibilities to maintain premises. Furthermore, the Rent Authority should be intimated about the agreement within 2 months after the agreement is signed.

2. Security Deposit: The security deposit amount cannot exceed the total of: i. 2 months rent in case of residential premises and ii. 6 months rent in case of non-residential premises. The deposit will be refunded to the tenant at the end of the tenancy period after making deductions if any.

3. Tenancy Period: The tenant needs to intimate the landlord in case he wants to renew his rent agreement, otherwise if he fails to renew and the period has expired or if the tenant fails to vacate the property at the end of the tenancy period then he will be bound to pay double the rent amount for the first two months and if he continues to stay without any agreement after the end of 2 months then, he will be charged four times the monthly rent.

4. Eviction: The landlord can file a complaint to the Rent authority in cases if: the tenant refuses to pay rent, or fails to pay rent for 2 months; misuse of the premises; or making structural changes without consent.

5. Sub-letting: It is prohibited under the Act to sub-let a residential premise not until it is agreed by the landlord and a separate agreement has been entered into and the rent authority has been intimated about the same within 2 months.

Provisions for Landlords in this Act

1. If the tenant agrees to the maintenance and repairs but then refuses to do the same, the landlord can deduct the charges from the security deposit, which the tenant needs to pay back within a month of receiving the notice.

2. In case of eviction, the landlord can seek the help of the rent authority in case:

  • Where the tenant refuses to pay the rent; or
  • Where the tenant fails to pay rent of last 2 months; or
  • If the tenant made structural changes without the consent of the landlord; or
  • The tenant misused the property apart from what was agreed in the agreement.

3. If the tenant fails to vacate the premises after the termination of the tenancy agreement, he will be liable to pay twice the amount of rent for the next 2 months and four times the rent after the expiry of 2 months period.

4. In case of death of the landlord, if the legal heirs prove to the rent authority that they require the land for further construction then eviction notice can be issued to the tenants.

Provisions for Tenants in this Act

1. If the landlord decides to increase the rent, a notice should be given 3 months in advance and the same should be intimated to the rent authority.

2. In case of any repairs to be made by the landlord, 24hrs notice should be given to the tenant.

3. In case the premises become unsuitable to stay due to a force majeure, no rent can be charged till it becomes habitable, or otherwise, the landlord will have to refund all the charges.

4. The landlord cannot coerce the tenants to vacate the premises before the termination of their tenancy agreement and neither can he shut down any of the essential services such as electricity, water, etc.

Implementation status and timelines

This Act defines the timelines regarding the adjudication of complaint or application by all the three authorities:

– Within 30 days after filing, in cases where the premises are being misused or structural changes made without the consent

– Within 60 days after the filing of the application, appeals to the Rent court and Rent tribunal.

– In cases related to eviction or death of the landlord, within 90 days.

Challenges faced 

1. Perplexed Institutional Structure: The Central Government established the rent authority to make submissions for the lease agreements which already was being done by the sub-registrar, hence as per the experts is a futile expense.

2. Privacy violation: As per this act, the parties need to submit their aadhar card number, PAN details, etc which will then be published on their website, this is a violation of privacy. The Act is still silent on these issues and clarifications are due from the government.

3. Repossession issue still untouched: The landlords still have the same legal recourse as earlier, and the grounds for eviction have also been restricted which limits their control as well. Homeowners are not provided with many perks for providing rental services under this Act.

  • No attention to Informal renters:  There is no penalty for not making a rent agreement, just one would be devoid of availing any of the legal remedies under this act. And this leaves the informal rental market completely out of the picture.

This Act brings about many reliefs for the tenants as well as the landlords but is still silent on many more conflicting issues. India did not have a uniform rental system and even this is an optional Act, where the states are free to implement these or amend these according to their needs.

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