As per the 2011 census, of 21 million urban houses, only 20% are given on rent. The remaining one crore houses are lying vacant for various reasons. The Central Government approved the Model Tenancy Act in June 2021 to address this problem of empty households and, most importantly, bring about regulation in Tenancy laws in India.
This article will briefly discuss the main components of the Model Tenancy Act, how it protects landlord’s and tenant’s rights, and the dispute resolution mechanism as per the Act.
Scope of the Model Tenancy Act
The Model Tenancy Act (“Act”) applies to premises or houses given on rent for commercial, residential, or educational purposes only. It does not apply for industrial purposes or hotels, inns, lodging houses, etc.
This Act is prospectively applicable without affecting the existing tenancy.
Since housing/tenancy is a state subject, the Act is not mandatory for the States and Union Territories to implement.
Therefore, the States and Union Territories are at their discretion to adopt and implement the Model Tenancy Act and amend their existing rental laws and tenancy act suitably.
Why was the Model Tenancy Act enacted?
Vacant residences, difficulty in getting the tenants to vacate the premises, and lengthy legal procedure for dispute resolution are primary reasons for the Government to develop a framework for tenancy laws. The Act was enacted to provide an effective and speedy dispute resolution mechanism and ensure that neither tenant nor landlord’s rights are affected.
The Act has also laid down the rights and obligations of both landlord and the tenant. It will enable even private participation in renting houses, thereby ensuring more houses are given on rent and resolving the issue of shortage of houses. It also provides that adequate houses are available for various income groups.
Furthermore, the tenants are allowed to stay in the rented premises for a month in the event of force majeure (Act of God).
What is the main aim of the Model Tenancy Act?
There has always been a ruckus between the landlord and the tenant. The Act has been enacted with the following intentions:
- To resolve the disputes between the landlord and the tenant in a speedy manner;
- To make sure that the landlord does not exploit the tenant,
- To create a balance between the renter’s (i.e., landlord) interest with the tenant,
- To protect the tenant against eviction and rental hikes,
- To institutionalize the rental process by making it mandatory to enter into a written agreement and submit the same to the rental authority of the state or district (only for the state that adopts the Act).
How does the Act protect the rights of landlord and tenant?
As the Act aims to create a balance between the landlord and the tenant, it has made favorable provisions for both parties (i.e., the landlord and the tenant).
- The landlord’s rent amount cannot be increased within the time period as agreed in the agreement.
- In the case of residential property, the security deposit is capped at two-month rent. In the case of non-residential property, the security deposit is capped at one month’s rent. To ensure that the tenant is not pressured to deposit a considerable amount.
- If the landlord wishes to increase the rent amount, he should give a three-month notice to the tenant informing the tenant to arrange the same.
- If the landlord wishes to enter the rented premises for any repair, he should give a 24 hours notice to the tenant.
- The tenant cannot be evicted during the term of the agreement.
- Suppose the tenant refuses to vacate the property at the end of the term of the agreement. In that case, the landlord will get compensation, which is double the monthly rent for two months, increasing to four times until the tenant vacates the said premises.
- The tenant is not allowed to sublet the premises without the written permission of the landlord.
- Both the landlord and the tenant shall bear the maintenance amount.
- The cost of repair conducted by either party on behalf of the other party can be deducted from the rent amount or security deposit as the case may be.
- The responsibilities of both shall be clearly defined in the agreement.
Dispute Redressal Mechanism as per Model Tenancy Act
Suppose any dispute arises between the landlord and the tenant. In that case, either party can approach the Rent Authority to resolve the dispute. If the dispute is not resolved or if either party is not satisfied with the Rent Authority’s decision, they can approach the Rent Court followed by the Rent Tribunal, which would be a final resort.
The Acts also provides that during the pendency of the dispute or in the event of any conflict of interest, the landlord shall not withhold or stop any essential supply (such as electricity supply, water supply, etc) to the rented premises.
Suppose any repair is to be undertaken which would disrupt any utility supply. In that case, the landlord should give 24- hours notice to the tenant before conducting any repair.
What are the rights and obligations of landlord and tenant as per the Act?
The Act has laid down the landlord and tenant’s following rights and obligations to ensure that both the landlord and the tenant’s interests are taken care of.
Except as provided under the tenancy agreement, all the structural repairs (except that are done by the tenant) such as the painting of windows and doors, whitewashing of walls, internal and external electrical wiring, plumbing and changing pipes, sundry maintenance, etc. shall be borne by the landlord.
The tenant will be responsible for other repair works such as socket repairs, drain cleaning, kitchen fixture repairs, maintenance of open spaces, replacement of glass panels, etc., as agreed under the tenancy agreement.
Model Tenancy Act has made provisions to protect the interest of the landlord and the tenant. It aims at providing laws that would build confidence in the landlord and remove the fear of renting the house to the tenant. It also ensures that the landlord causes no injustice by randomly increasing the rent or security deposit or stopping any essential supply from evicting or distressing the tenant. The Act makes it mandatory for the party to enter into a written tenancy agreement which needs to be submitted to the rental authority of the respective state. The State and the union territory are at discretion to adopt the Model Tenancy Act.