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Current Affairs

Model Tenancy Act

Date: 08 June 2021 Tags: Bills & Laws

Issue

The Union Cabinet has approved the Model Tenancy Act (MTA) to streamline the process of property renting and boost the rent economy.

 

Background

The Union government had brought the Model Tenancy Act (MTA) in 2019 so as to create a separate economy based on rent collection in real estate sector.

 

Details

  • Large number of houses in urban areas have not been rented. This is because owners fear of repossession.

  • The aim of the new act is to bring accountability and transparency in the existing system to ensure that interests of owners and tenant are maintained.

  • The states have been given the option to adopt this legislation as it is or modify their existing ones to bring them on par with MTA.

  • The government wants to increase potential of this sector by reducing procedural barriers in registration, increase rental yield, increase discipline and transparency.

 

Application of this law

  • When this act comes into enforcement, no individual is allowed to collect rent for their properties without agreement in writing.

  • This act has been applicable prospectively and earlier rents and tenants will not be affected. Both urban and rural areas will be covered by this act.

 

New changes

  • A grievance redressal mechanism will be set up by the state governments. It will include rent court, rent authority and rent tribunal.

  • Rent court and rent tribunal have to dispose of the cases undertake within 60 days. Monetary ceiling for amount of rent to be collected has not been set.

  • The premises can be sublet by the tenant with the prior permission of the landlord. During disputes with landlord, the tenant has to pay rent until resolution.

 

Provisions

  • Owners can collect deposit from tenants but it should not exceed the two months’ rent for residential properties and one month in case of non-residential ones.

  • Arbitrary removal of tenant cannot be carried out during the agreement period except in the way prescribed in the act.

  • Landlord can impose double monthly rent for two months and four time monthly rent thereafter if tenant refuses to vacate the property if agreement has been broken.