Expert view: How big a change will the Model Tenancy Act bring? Does it apply immediately?  

Among the changes under the act, unless agreed otherwise in the agreement, the landlord will make all the structural repairs, whitewashing, external electrical wiring and related maintenance.
For representational purposes.
For representational purposes.

The Union government on Wednesday cleared the Model Tenancy Act, which offers legal protection to both owners and tenants. According to realtors, the new Act erases many legacy issues associated with renting residential properties and goes a long way in formalising the sector. But how significant a difference will it make to those renting houses and to the landlords? Anuj Puri, Chairman, Anarock Property Consultants shares his observations.

What are the biggest changes or highlights?

The government has listed guidelines that enforce rental contracts and protect the rights of both landlords and tenants. Some notable features include:

  • After commencement of the Act, all premises (residential or commercial) shall be rented only after a written agreement on mutually agreed terms. This has to be informed to the proposed Rent Authority within two months from the date of tenancy agreement.
  • The Act will provide for a fast-track quasi-judicial mechanism for adjudication of disputes.
  • The landlord or the property manager may enter the premises let out on rent only after serving a notice, in writing or through electronic mode, to the tenant at least twenty-four hours before the time of entry (for inspection or any repair etc.).
  • The tenant shall not carry out any structural change or erect any permanent structure in the premises or let it out on rent without the written consent of the landlord.
  • The landlord is entitled to get a compensation of double the monthly rent for two months and four times the monthly rent thereafter if a tenant does not vacate the premises after tenancy has been terminated by order, notice or as per agreement.
  • If the term of the tenancy ends at the time when the locality (where rented premises is situated) experiences any force majeure event, the landlord shall allow the tenant to continue possession of premises for one month from the cessation of such force majeure event on the same terms of the prevailing tenancy agreement.
  • The tenant cannot sublet a part of or the whole property or carry out any structural change without execution of a supplementary agreement between landlord and tenant.
  • The state government /union territory administration in consultation with the jurisdictional High Court may by notification appoint a District Judge or Additional District Judge as Rent Tribunal in each district.
  • Any person aggrieved by an order passed by the Rent Court may prefer an appeal along with a certified copy of such order to the jurisdictional Rent Tribunal within the local limits on which the premises are situated, within a period of thirty days from the date of that order. 

How much will the security deposits be?

Security deposit has been capped to a maximum of two months’ rent in case of residential property, and six months in case of non-residential property. It shall be refunded by the landlord at the time of taking over vacant possession of the premises after making all due deductions, if any.

When will the Act kick in? 

The Act shall come into force on such date as the State Government or Union territory Administration may, by notification in the Official Gazette, promulgates it. Different provisions of this Act can be promulgated on different dates.

Can those who have rented houses ask for agreements to be reworked? 

The tenant may request the landlord for renewal or extension of the tenancy, within the period agreed to in the tenancy agreement, and if agreeable to the landlord, may enter into a new tenancy agreement with the landlord on mutually agreed terms and conditions.

And do the states/union territories have to notify for the Act to apply?

Yes, the Act will come into force on such date as the State Government/Union Territory Administration promulgates it by notification in the Official Gazette.

Responsibility of owners and tenants according to the act

  • Under the act, unless agreed otherwise in the agreement, the landlord will make all the structural repairs, whitewashing, external electrical wiring and related maintenance when required. 
  • The tenants, on their part, will be responsible for drain cleaning, switches and socket repairs, kitchen fixtures repairs, replacement of glass panels in windows, doors and maintenance of gardens and open spaces, among others.
  • Landlord cannot visit his/her rented property without giving a 24 hours notice. The visiting hours should be between 7 am to 8 pm.

What about those renting commercial properties? What are the benefits they stand to gain?

Post the pandemic, several commercial tenants who couldn’t pay their rents tried to invoke the ‘force majeure’ clause. But it was not laid out exhaustively under the law, and as such its applicability as seen largely depended on the language of the rental agreement and the interpretation by courts henceforth.

However, the new Act clearly defines the force majeure clause. According to it, ‘force majeure’ means a situation of war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting the habitation of the tenant in the premises let out on rent. This will go on to benefit the tenants. 

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