Need of Model Tenancy Act, 2019
The rental market in India is already underdeveloped. There are many reasons like of such underdevelopment like
- Lack of rental policy issues
- Low rental income
- Lack of demand
- NRO avoids to lease.
- Tenant-landlord conflicts
- Lack of proper legislation etc.
To overcome such disputes, Government has announced draft Model Tenancy Act 2019 to make balance between the rights and interest of both landlords and tenants, and create adequate rental housing stock in the country.
In union budget 2019 also, Finance Minister Nirmala Sitharaman had also said government will take actions and reforms to promote rental housing including the finalization of a Model Tenancy Law.
It is further ensuring the timely and speedy sorting of disputes by establishing Rent Courts and Rent Tribunals to hear appeals for matters connected to rental housing.
How this Model Tenancy Act will help?
- It will help to maintain legal framework for rental housing in India.
- It will help give a boost to private participation also.
New proposals laid down in Model Tenancy Act, 2019 are as follows:
- A cap has been made on security deposit I.e. maximum of two month’s rent in case of residential property, and a minimum of one month’s rent in the case of non-residential property.
- Three months prior notice hall be given by landlord in case of any change in the amount of rent. Also, He cannot hike the rentals in the middle of the tenure of agreement
- Subletting, transfer or assigning the right of property or any part is not allowed by the tenant.
- Penalty provision : Once the tenancy has been terminated by order, notice or agreement and the tenant doesn’t vacant the premises, then he has to compensate to landlord in such manner: 1.Double of the monthly rent for two months; and 2.Four times of monthly rent thereafter.
- Landlord cannot deny to provide the supplies or services of common facilities like electricity, water,etc.
- Any improvement in the structure damage, whitewashing or painting of doors etc. shall be done by landlord.
- The terms of agreement executed between a landlord and his tenant will be binding upon their successors in the event of the death of the landowner or tenant.
- The rent agreement shall be mandatory intimated to the rent authority within two months of signing the agreement and the authority will issue a unique identification number to both the parties within 7 days.
- An officer of the rank of deputy collector will act as rent authority to adjudicate any issue arising out of a rental disagreement.
Note : The draft Model Tenancy Act, 2019 will be applicable prospectively. It will not impact on the existing tenancies.
A copy of the Model Act has been shared by the government with the States and Union Territories (UTs) for their feedback and comments. After finalization it will be adopted accordingly.