The Government of India sanctioned the Model Tenancy Act 2021 on June 02, 2021, to pave the way for renting properties across India and boost the estate sector. It revises the legal structure with mandatory tenancy deal, submission of rent, rights and obligations of the landlord, tenant and conditions for moving out from there.
It aims to open up vacant premises, augment rental yields, lower or avoid ethical practices, prevent red-tapism while registration, and have fairness in agreements with proper discipline.
The act, which is for residential and commercial tenancies, is known as ‘Model’ law. As per the Ministry of Housing and Urban Affairs, the Model Tenancy Act 2020 included 47 sections and two schedules. Now it comes prepared with the bill to focus on accomplishing PM Narendra Modi’s ‘Housing for All’ by 2022 vision.
Why is this Act necessary?
According to Census 2011, in the urban belt, over 1 crore houses were vacant. The concerned ministry says, “The existing rent control laws are restricting the growth of rental housing and discourage owners from renting out their vacant houses due to fear of repossession. One of the potential measures to unlock the vacant house is to bring 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.”
The State List of the Seventh Schedule and Article 246 of the Constitution has land falling under it with the state governments’ decision and amendment process to make laws on subjects and matters of rental housing. For example, Haryana Urban (Control of Rent and Eviction) 1974 and Maharashtra’s Rent Control Act 1999.
Mandatory Rent Agreement
The model law asks the state government to establish rent authority (Headed by Deputy collector), rent court (Headed by Additional collector or Additional district magistrate) and rent tribunal and to clearly state the civil courts will not hear such cases anymore. Hence, it establishes a quasi-judicial process for conflicts with fixed and fast-track schedules for adjudication.
It says that it should have a written agreement for all tenancy deals entered into after the law gets into place. This agreement is essential; the landlord sends the agreement to the rent authority and the tenant at the same time within two months.
The rent authority has to set up a digital platform in a local vernacular language or the language of the respective state or Union Territory to make the passage of the said agreement.
How was it recognised?
Before the Pradhan Mantri Awas Yojana-Urban Mission 2022 was introduced, it was announced that 20% of the two crore houses to be created for rent purposes. It was decided on a 2013 report by a Task Force for Rental Housing, which stated that suitable rental housing “addresses the issues of the underprivileged and inclusive growth, in an even more direct manner than affordable ownership housing”.
The Expenditure Finance Committee passed a blueprint of Rs 6,000 crore for a rental component in PMAY-U. At the same time, the Central government would incur 75% and remaining by states, NGOs or CSR activities of the private sector and urban local institutions.
Eviction in unforeseen situations
The tenants should not vacate their houses in case of any catastrophic and unexpected natural events, namely war, flood, drought, fire, cyclone and earthquake. They can stay in possession of the premises for a month after the event gets over.