A quick summary of the Model Tenancy Act 2021

The central government first released a model tenancy act draft in the year 2019. The final Model Tenancy Act (MTA) was approved on the 2nd of June 2021.

Land and property are on the state subject list hence the central government cannot make a national law.

It will be the state government’s prerogative to use this act to streamline the process of renting a property in their respective states.

This tenancy act is a good model and has the potential to change the rental economy in the real estate sector.

The act can open up the Indian rental market to exciting new possibilities if the state governments accept this act and implement it in the state.

Why this act ?

One of the potential measures to unlock the vacant house is to bringing transparency and accountability in the existing system of renting of premises and to balance the interests of both the property owner and tenant in a judicious manner,

Indian Express report

I know from personal experience that the rental market in India is highly unregulated and quite often the rights of either the landlord or the tenant are ignored.

I have lived in around 15 cities in India at one point or the other and save a couple of times I have always felt cheated in one way or the other.

I had to forfeit 3 months of security in Mumbai once because of the unregulated tenancy arrangements.

According to the 2011 census, there were 2 crore rented houses with another 1 crore lying vacant due to counterproductive policies.

It was also found that almost 70% of the rented houses did not have a rent agreement with their landlords.

Both the tenants and the landlords would much rather take the risk of being cheated than go through the complex procedures of getting a rent agreement.

With real estate purchasing becoming more and more difficult in these uncertain times more and more people are preferring to rent rather than to purchase.

This trend is only going to get stronger unless a dramatic increase in the purchasing power of the private sector employees happens.

So, It was the need of the hour to bring an act to regulate the rental market.

As mentioned above since property legislation is a state subject, the states can either adopt the act as it is or they can amend their existing tenancy act with the new provisions of the MTA.

What does the act say?

  • With the new act, no one will be able to rent or let a property without a written agreement
  • States will set up a grievance redressal mechanism that will contain the rent authority, rent court, and the rent tribunal for the fast track resolution of disputes
  • The rent court will have to be mandatorily disposed of within 60 days
  • A regional language digital platform would be set up by each state for submitting tenancy agreement and other documents
  • Tenants will have to keep paying the rent to the landlord until the dispute is solved
  • A tenant cannot sublet the apartment until he has the prior consent of the landlord
  • The security deposit to be paid by the tenant should not exceed two months rent for residential and six months for a commercial property
  • The landlord will be responsible for structural repairs, whitewashing of walls, painting of doors and windows, changing and plumbing pipes, internal and external electrical wiring, and sundry maintenance
  • Drain cleaning, socket repairs, kitchen fixture repairs, replacement of glass panels, and maintenance of open spaces among others will largely be the tenant’s responsibility,
  • The tenants cannot be evicted during the tenancy period unless agreed upon in writing by both parties
  • The tenancy will be deemed to be renewed on a monthly basis if the premises are not vacated and the tenancy not renewed
  • You can get a copy of the Model Tenancy Act here, It is a 27-page document and is fairly easy to read.

The chandigarh administration has already announced that it will adopt the model tenancy act. I hope that more and more states keep the polictics on this issue aside and adopt this act in letter and spirit.

This act has the potential to change and improve the rental real estate scene in India. It is now up to the respective state governments to take a call on the matter.

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