Model Tenancy Act, 2021

Rental housing is a common viable option in Indian cities for individuals and families working in both the formal or informal sector. It is crucial especially in urban areas for a diverse group of people when their stay in the city is temporary or they are constrained by financial means to own a house. Additionally, some individuals may even make a strategic choice of living in rented units for a longer time than opting for home ownership. Regulating rental housing falls under the purview of state governments since the issues related to land and rental laws fall within the state list of the Constitution of India. Post independence, the rent control laws placed several safeguards for the landlords and tenants but over time, they caused new constraints of low rental yields, lack of proper maintenance and other related challenges to the parties involved.

The draft National Urban Rental Housing Policy (NURHP) in 2015, acknowledged that the housing shortage will not be solved by home ownership alone and rental housing at scale is also needed. A version of the draft Model Tenancy Act (MTA) 2015 was released. Following this, two drafts were released in 2019 and 2020 for public feedback, which proposed a legal framework to balance rental housing laws.

The final MTA 2021 was approved by the Union Cabinet on June 2, 2021 and it was circulated among the states for adoption based on their local contexts. It intends to enable a faster adjudication system for dispute settlement, regulate the renting of properties and safeguard the interests of both the landlord and tenant. The MTA includes eight chapters and the highlights from each chapter are mentioned as follows.

• The Model Act mandates a written agreement to be signed between the landlord and tenant. The agreement should specify the rent, period of tenancy, maintenance of premises and other related terms or conditions. The Rent Authority (appointed officer) shall be informed of the execution of the tenancy agreement within two months from the date of agreement.
• Certain restrictions are placed on sub-letting, where a tenant cannot sub-let the premises without entering into a supplementary agreement in addition to the existing agreement.
• In the case of force majeure conditions such as a natural disaster , certain advantages and concessions shall be provided to the tenant. If such conditions occur when tenancy is in termination period, an extra month shall be given for the tenant to have time to vacate the premises. If the premises is adversely affected by force majeure condition then the rent shall not be charged until the time the premises has been restored and made habitable.

• The rent shall be fixed and revised in accordance with the terms of the tenancy agreement.
• In case of expenditure incurred for carrying out improvement, addition or structural alteration on the rental premises (excluding the basic repairs necessary to be carried out), the landlord may increase the rent on agreement, one month after the completion of such work.
• Security deposit shall not exceed two months rent, for residential premises; and not exceed six months rent, in case of non-residential premise. The security deposit shall be refunded at the time of repossession, after making required deductions.

Rights and obligations of landlord and tenant

• Landlord or property manager shall on receipt of rent, provide a duly signed acknowledgement receipt for the amount received.
• The premises shall be kept in a good condition and reasonably habitable like at the commencement of the tenancy, except for normal wear and tear. Both landlord and tenant shall respectively be responsible to repair and maintain the premises as specified in the agreement.
• The landlord can visit the premises to carry out repairs or replacement or inspection of the premises for a reasonable cause after an intimation 24 hours prior to the visit.
• The landlord or property manager cannot withhold any essential supply to the premises occupied by the tenant.

Eviction and recovery of possession of premises by the landlord

Rent Authorities, their powers and appeals

Rent Courts and Rent Tribunals

• The District Collector or District Magistrate shall appoint Additional Collector or Additional District Magistrate or an officer of equivalent rank, to be the Rent Court for the purposes of this Act, within the jurisdiction. Any person discontented by the order of the Rent Authority may prefer an appeal to the Rent Court having territorial jurisdiction.
• The state government’s administration may, in consultation with the jurisdictional High Court, appoint a District Judge or Additional District Judge as Rent Tribunal in each district. The Tribunal can adjudicate appeals against the Rent Court’s orders.

• The state governments may, subject to the condition of previous laws, make rules for carrying out the provisions of this Act. Every rule made by the state government shall be laid before the state legislature and the state-level Act shall be executed within time.

Conclusion

The new MTA is a well-intentioned suggestive framework in keeping the interests of both parties but its implementation will come into effect when states revise their existing rental laws. Under the Pradhan Mantri Awas Yojana - Urban (PMAY-U), one of the mandatory reforms that states shall undertake is to legislate or amend the existing rental laws on the lines of the MTA. The efficacy of the Act will depend on its adoption by states. Some experts have highlighted that MTA leaves certain issues unaddressed and that more regulations are required to enable a positive transformation in the rental housing sector.