To promote rental housing and accomplish the mission of ‘Housing for All’ of the Government of India, the finance minister Nirmala Sitharaman has introduced the Model Tenancy Act to bring transparency between the landlord and tenants in all the states and Union Territories of India.

Features of the Model tenancy act:

The new tenancy act describes the rights and duties of the landowner and the tenant in a detailed manner. The key terms of engagement are described in the below-mentioned points:

  • The existing rental agreements and tenancies will not be bound and impacted by this policy as the Act will be applicable prospectively.
  • Once the Act comes into effect, no person can let or take on rent any residential or non-residential property without an agreement in writing which shall be intimated to the rent authority.
  • The landlord can keep 2 month’s house rent and one month rent of non-residential properties as security deposit with himself.
  • The landlord cannot deny providing the essential utilities and access to common facilities to the tenant.
  • The landlord can under no circumstances can increase the rent without giving at least 3 months’ prior written notice to the tenant before the revised rent becomes due. Also, the rent of the property cannot be increased in the middle of a rental term.
  • If the rental period mentioned in the agreement expires and the tenant refuses to vacate the property, then the landlord can levy penalty on the tenant and can claim double of the monthly rent for 2 months and after 2 months, 4 times of the monthly rent can be collected.
  • As per the provisions of the Act, it is mandatory for both the landlord and tenant to intimate to the Rent Authority about the tenant agreement within 2 months of executing the rental agreement and the rent authority after receiving the intimation shall issue a unique identification number to the tenant as well as the landlord and upload all the details of tenancy agreement on its official website within seven days from date of receipt of tenancy agreement along with prescribed documents.
  • All the terms of the agreement would be binding upon the successors in the event of the death of the landlord or the tenant and the successors will have the same rights and obligations as mentioned in the agreement for the remaining period of the tenancy.
  • Both the parties must not run out of their responsibility for maintenance of the rented property as specified in the rental agreement. In case of any damage or additional charges incurred for the maintenance of the premise, the liable person must make his part of the payment. If the landlord denies making the payment, the tenant can deduct the amount he spent from the monthly rent he pays and if the tenant refuses to make the payment, the landlord can deduct the same from the security amount.
  • The tenant cannot sublet any part or whole of the rented property and transfer or assign his rights without taking the prior permission in writing from the landlord and after permitted, the tenant cannot sublet it for more than the amount he pays as rent to the landlord.
  • If the tenant has not paid rent for the 2 months, then the landlord has the right to move the case to the rent court and in case the landlord refuses to accept the rent within 2 months, the tenant has the option to deposit the rent amount with the Rent Authority which will investigate the matter and pass an order on it.

The Model Tenancy Act is thus expected to be beneficial for both tenants and the landlords and resolve all the disputes between them.

 
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An MBA in finance, I like to cover the wide range of topics related to Taxation, SEBI, Finance and anything that is Public Helpful. The motive is always to make it simpler for the taxpayers understand the system better and take informed decisions.

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