NEW DELHI: Realty players expect the Model Tenancy Act, cleared by the Cabinet on Wednesday, to increase private investment in rental projects and formalisation in rented property. According to realtors, the new Act erases many legacy issues associated with renting residential properties and goes a long way in formalising the sector.
“The Act will enable institutionalisation of rental housing by gradually shifting it towards the formal market. There was a need for a new law, which would make things easier for all stakeholders – tenants, landlords and investors – to tansact and deal in rental housing,” said Niranjan Hiranandani, National President of NAREDCO.
Anuj Puri, Chairman, Anarock Property Consultants said that once implemented in all fairness across states, the Act will go a long way in formalising and stabilising the rental market. “It would also revive the fortunes of not just the rental market but the housing sector at large,” added Puri.
Two years after announcing the Act, the Union Cabinet on Wednesday finally approved the Model Tenancy Act with a focus on boosting rental housing and reducing litigation. The Act fixes limits for security deposits, includes relief during unexpected disasters, and provides for a faster dispute resolution by creating a rent authority, a rent court, and a rent tribunal. Such cases won’t come under the jurisdiction of civil courts. It also aims to unlock a huge inventory of residential units, currently lying unsold, for rental purposes. According to the 2011 census, more than one crore homes lie vacant in the country.
“Built homes lying vacant is highly ironical for a country where housing shortage is a pressing concern. This Act will not only solve this conundrum but will also attract private sector participation in rental housing,” said Altaf Ahmad, CBO-Rental Business, Square Yards. Real estate experts also said that the efficacy of the Act now depends on how states implement it. “It will remain to be seen to what extent the states will toe the central government’s line,” noted Puri.