Land Reforms

Explained: Draft Model Tenancy Act

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Model Tenancy Act

Mains level : Tenancy Laws in India

  • Recently the Ministry of Housing and Urban Affairs (MoHUA) released the draft Model Tenancy Act, 2019, which aims to regulate rental housing by a market-oriented approach

Provisions of the Model Tenancy Act

  • The Model Act lays down the obligations of tenants and landlords, and provides for an adjudication mechanism for disputes.
  • It is intended to be an Act to balance the interests of owner and tenant by establishing adjudicating mechanism for speedy dispute redressal and to establish Rent Court and Rent Tribunal to hear appeals and for matters connected to rental housing.
  • Its stated aim is to promote the creation of a rental housing stock for various income segments including migrants, formal and informal sector workers, students, and working professionals, mainly through private participation.
  • The Act mandates that no person will let or take any rental premises without an agreement in writing, in both urban and rural areas.
  • Within two months of executing such an agreement, the land owner and tenant are required to intimate the Rent Authority, who will issue a unique identification number to both parties.
  • Agreements can be submitted through a dedicated digital platform.

Tenant and landlord rights

  • The Model Act lays down various rules, including that the security deposit to be paid by the tenant should not exceed two months’ rent for residential property, and should be a minimum of one month’s rent for non-residential property.
  • It lists the kinds of repairs each party would be responsible for, with the proviso that money for repairs can be deducted from the security deposit or rent, as applicable, if a party refuses to carry out their share of the work.
  • The Rent Court can allow repossession of the property by the landlord if the tenant misuses the premises, after being served a notice by the landowner.
  • Misuse of the premises, as defined, includes public nuisance, damage, or its use for “immoral or illegal purposes”.
  • If the tenant refuses to vacate, the landlord can claim double the monthly rent for two months, and four times the monthly rent thereafter.

Why such Act?

  • A/c to the Census 2011 1.1 crore houses are lying vacant.
  • 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.
  • The Model Act would bring these into the rental market, and would promote the growth of the rental housing segment.
  • One of the potential measures to unlock the vacant house is to bringing 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.

Expected Outcomes

  • The Model Act, if adopted and enforced by the states, will lead to a better regulated private rental housing market for the middle and higher income segments.
  • In 2015, before the Housing for All by 2022 Mission (Pradhan Mantri Awas Yojana-Urban) was launched, it was decided that 20 per cent of the two crore houses that were to be created should be exclusively for rent.
  • The decision was based on a 2013 report by a Union government Task Force for Rental Housing, which held that affordable rental housing addresses the issues in an even more direct manner than affordable ownership housing.
  • However, when it was rolled out in late 2015, the mission promoted only ownership housing — with no mention of rental stock.
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