Model Tenancy Act 2021 – Fix Home Rental Market in India?

Rental market of properties is a very vibrant and deep market in India and every year millions of people rent out properties (residential and non-residential) in India.

Yes, Model Tenant Act, 2021 is very soon going to be a reality in India and it’s mainly to setup the rules and protect the rights of tenants and property owners from each other.

Important Rules under Model Tenancy Act 2021

On the hand, property owners feel tenants are also horrible who do not care for properties and do a lot of damage which forces them to keep enough security deposit with them. At one end, tenants think that property owners are blood suckers, who just want to withhold the security money at any cost and try to dominate them.

Here are some of the most important rules you should be aware about the model tenancy act, 2021

This Model tenancy Act 2021 is trying to exactly solve this and wants to lay down enough guidelines, rules which will help both parties. Many a times, though an agreement is made legally, on the ground level things don’t work out and there is lack of professional relationship.

The security deposit can’t exceed more than 2 months’ rent

In cities like Bengaluru, one has to deposit the security deposit as high as 10-12 months of rent, which many tenants complain about. However at the same time, a lot of home owners feel, it’s too less money to cover the risk of having the premises damaged by the notorious tenants. Note that this limit of 2 months’ rent is only for residential properties. In case of non-commercial premises, the security deposit can be maximum of 6 months’ rent.

As per the law, the security deposit which home owners take from tenants can’t be more than 2 months of rent.

Written Agreement is mandatory

I guess anyways most of the people were making a proper agreement, but now it’s a law in itself. This agreement is also to be submitted to the concerned rent authority within 2 months of the agreement date.

There will be some digital platform which will be setup for this as per the current wordings. Now a written agreement is mandatory when any premise is given on rent.

Heavy Penalty if tenant does not vacate premises on time

Once the agreement is over, there is a maximum of 6 months of extension on the same conditions and rules which are mentioned in the agreement. But if even after this 6 month extension, (or if tenancy is terminated by notice or order) the tenant does not leave the premises, then there are heavy penalties levied on them. They will have to pay double the rent for first 2 months, and then 4 times rent for another 2 months and then 6 times the rent for another 2 months.

Separate Rent authorities, courts & tribunals setup in each district

At the first level there will be rent authority, then a rent court and finally a rent tribunal will be set under each district. This will make sure that a separate resolution system will be setup for these things.

A separate 3 tier system will be created in each district for handling the cases related to rental market. A civil court will not have jurisdiction over these cases which come under Model Tenancy Act.

The landlord cannot stop the essential supplies of the premises

It is mainly to protect the rights of tenants as far as they have occupied the premises. If home owner still does this, the tenants can complain to the rent authority and an order can be passed by them to restore the services and also put penalty on home owner.

Its mentioned that the property owner cannot stop the supply of any essential supply like water, electricity etc. just because there is some dispute with the tenant. In real life its seen that if there is any dispute or argument, the home owners take these steps to “teach a lesson” to the tenants.

Rent Revision can happen only as agreement

This will help the unorganized rental market where many a times, home owners increase the rent many a times just to make sure people leave the house on their own.

The rents can’t be increased arbitrary now, it has to happen only as per the agreement which was written and agreed on.

No structural changes or sub-letting of property

If sub-letting is to be allowed, a supplementary agreement has to be made and even that has to be submitted to rent authority.

The tenant cannot make any structural changes in the property, not they can sub-let a portion of property to someone else without the consent of the property owner.

Eviction of tenant on certain grounds

refusal to pay the agreed rent failure to pay rent for more than two months;
parting of possession of part or whole of premises without written consent of landlord;
misuse of premises even after receiving written notices to desist from such misuse; and
structural change by tenant without written consent.

If the tenant has to be evicted, then the property owner can’t just appear one day and order the eviction. It has to be done only by seeking eviction through the rent authority and it can be done on certain grounds.

Roles and Responsibilities of both parties

It is tenant responsibility to do most of the repairs and replacement of small components like Wash Basic Repair, Taps, switches and sockets.

The law also defines the roles and responsibilities of landlord and tenants and tells what has to be fixed by whom.

Respect of Privacy and Rights of Tenants

They have to inform that tenants about their visit 24 hrs. before the entry (through electronic medium) . No doubt that this is not applicable if your relationship with the other party is cordial and friendly. This point is mainly there to protect their rights and privacy.

The law also tries to establish the fact that once the tenant has occupied the house, the property owner can’t treat them in wrong way and can enter the premise anytime without notice just because of the fact that they are the owners.

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