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Current Affairs

Government issued Draft Model Tenancy Act

Date: 13 July 2019 Tags: Bills & Laws

Union Ministry of Housing and Urban Affairs (MoUHA) has issued Draft Model Tenancy Act (MTA) aimed promoting growth of rental Housing segment by regulating renting of premises. MoUHA now is seeking comments from the public and the stakeholders. It also has shared copy of draft Act with States/UTs for seeking their views/comments. Once finalized, Model Act will be shared with States/UTs for adoption.

Need for Model Act

As per Census 2011, nearly 1.1 crore houses were lying vacant in the country and making these houses available on rent will complement vision of ‘Housing for All’ by 2022. The existing rent control laws are restricting growth of rental housing and discourage owners from renting out their vacant houses due to fear of repossession. One of potential measures to unlock vacant house is to bringing transparency and accountability in existing system of renting and balance interests of both property owner and tenant in judicious manner.

Features of Draft Model Tenancy Act

  • Objective: To balance interest and rights of both the owners and tenants and to create an accountable and transparent ecosystem for renting premises in disciplined and efficient manner.
  • Monitoring Structure: It stipulates grievance redressal mechanism comprising rent authority, rent court and rent tribunal.
  • Applicability: It is for the whole of State that is urban and rural areas. It will be applicable prospectively and will not affect the existing tenancies.
  • Security deposit: It proposes to cap security deposit equal to maximum of two months’ rent in case of residential properties and minimum of one-month rent in case of non-residential property.
  • Digital platform: It will be set up in the local language of the State for submitting tenancy agreement and other documents.
  • Mandatory Rent Agreement:  After coming into force of this Act, no person shall let or take on rent any premises except by an agreement in writing.
  • Within two months of executing rental agreement both landowner and tenant are required to intimate to Rent Authority about agreement and within 7 days unique identification number will be issued by Rent Authority to the both the parties.

Benefits

This Act will enable creation of adequate stock of rental housing for various income segments of society including formal and informal sector workers, migrants, professionals, students etc. It will also increase access to quality rented accommodation, enable gradual formalization of rental housing market. It will help to overhaul legal framework vis-à-vis rental housing across the country. It is also expected to give fillip to private participation in rental housing for addressing the huge housing shortage across the country. It will also promote growth of rental housing and investment in the sector and promote entrepreneurial opportunities and innovative mechanism of sharing of space.