New Delhi: After dilly-dallying for over four years, the Narendra Modi government Wednesday came out with a draft model tenancy law.
The draft law proposes to set up an independent authority in every state for the registration of all tenancy agreements, and a separate court for resolving tenancy-related disputes. It also has a provision to cap rent rates, and thus check any arbitrary hikes.
However, the proposed legislation is a ‘model act’ because land is a state subject. “States will have the option of adapting or rejecting it,” a senior housing ministry official told ThePrint on the condition of anonymity.
The move could provide relief for both tenants and landlords and help take some load off India’s overburdened litigation process.
What the draft law envisions
The rent authority will be headed by a deputy collector-rank officer, and will be set up by district collectors with the approval of the respective state governments. The authority will set up a website where the details of all agreements will be put up.
It will be mandatory for both the landlord and the tenant to inform the rent authority after getting into an agreement. This will ensure that a landlord does not arbitrarily increase the rent in variance with what has been agreed to in the agreement. It will also ensure that the tenant is not evicted at the whim of the landlord, the ministry official explained.
The proposed act will also safeguard the interests of the landlord by ensuring that a tenant does not ‘squat’ on the property against the terms of the agreement. Landlords will also be able to charge rents — to be decided by the respective state governments — on par with market rates.
All disputes will be heard at rent courts that states will have to set up. Civil courts will no longer hear such cases, as it happens now. At present, thousands of rent-related disputes are pending in courts across India.
A long-awaited law
The Ministry of Housing and Urban Poverty Alleviation had drafted a similar Model Tenancy Bill in 2015, but it never saw the light of the day. PM Modi had spoken elaborately about bringing in a model tenancy act.
But now, ministry officials say the draft law could unlock a large number of rental stock. “Property owners won’t be apprehensive about renting out their premises,” said the official quoted above.
Many states have their own laws on rent, but the laws have become archaic over a period of time and failed to serve their purpose.
Penalty for overstaying
The draft law piloted by the Union housing and urban affairs ministry has also proposed hefty penalty for tenants who fail to vacate the rented property after their tenancy has been terminated by order, notice or as per agreement. A landowner will be entitled to get compensation of double of the monthly rent for two months and four times of the monthly rent after that, for the use and occupation of the premises by a tenant who does not vacate it.
However, if landowners decide to exercise their right to recover a property from an overstaying tenant, they will have to return any rent received in advance after deducting the charges due.
The ministry on Wednesday put the draft law on its website (www.mohua.gov.in) inviting suggestion and comments from all stakeholders.
The model law has also fixed the security deposit to be paid by the tenant in advance, which will be a maximum of two months’ rent in case of residential property, and a minimum of one month’s rent in case of a non-residential property. The security deposit shall be refunded to the tenant at the time of taking over vacant possession of the premises, after making due deduction of any liability of the tenant.
Also, no tenant will be allowed to directly or indirectly sublet or assign, whole or part of the premises for a rent that is higher than the rent charged by the landowner to the tenant.
Why news media is in crisis & How you can fix it
India needs free, fair, non-hyphenated and questioning journalism even more as it faces multiple crises.
But the news media is in a crisis of its own. There have been brutal layoffs and pay-cuts. The best of journalism is shrinking, yielding to crude prime-time spectacle.
ThePrint has the finest young reporters, columnists and editors working for it. Sustaining journalism of this quality needs smart and thinking people like you to pay for it. Whether you live in India or overseas, you can do it here.