More than six years after it was mooted by the Centre, the Union Cabinet approved the Model Tenancy Act, which aims to protect the interests of both tenants and landlords.
The government expects the Act, which states can enact, will open up a large number of residential and commercial properties for rental as the legal framework will eliminate the fear of owners losing their properties.
Housing and urban affairs minister H S Puri said he expects BJP-ruled states to roll it out and that other states to also do so as it benefits the common man. He said the policy, once notified by states, will cover urban and rural areas. It lays out the norms for establishing separate rent authorities, courts and tribunals in every district to protect the interests of owners and tenants.The Act says the rent and duration of tenancy will be fixed by mutual consent between the owner and tenant with a written agreement. It suggests that the security deposit for residential properties won’t be more than two months’ rent and for commercial properties, it can’t be more than 6 months.
For revision of rent, landlords need to give a written notice three months in advance and the new rent will be on mutual consent. To protect landlords, it suggests that if a tenant does not vacate the premises after the tenancy expires, the landlord will be entitled to compensation.
Similarly, the landlord can’t forcefully evict the tenant during the agreed contract period. The landowner has to approach the rent court for this by submitting a complaint of any default or if there is a bona fide requirement of the property by the legal heirs of the owner after his death.
Since the law will be applicable for prospective contracts, owners of prime commercial properties in Delhi, Mumbai and Kolkata, who had rented out properties decades back and have been getting peanut rentals, won’t get any benefit. On whether the model law has been prepared considering the political implications it would have had if such properties were also covered, Puri said, “The law is aimed at dealing with vacant houses. We are not touching pagdi tenants.”