The government had first released the draft of the Model Tenancy Act in 2019. Two years after announcing the draft Act, Union Cabinet finally approved the Model Tenancy Act with a focus on boosting rental housing and reducing litigation.  The Act will boost rental housing and reduce litigations. The Act fixes limits for security deposits, includes relief during unexpected disasters, and provides a faster dispute resolution by creating a rent authority, a rent court, and a rent tribunal. Tenancy cases will not come under the jurisdiction of civil courts after this Act will come in place.

The Act aims to establish a more robust trust relationship between tenants and landlords by clearly outlining their obligations. It seeks to cover both urban as well as rural areas. The Act will apply to premises let out for residential, commercial or educational use, but not for industrial use. It also will not cover hotels, inns and lodging houses.

“The Act will promote rental housing in the country having more than one crore vacant houses available for rent and will compliment Prime Ministers vision of ‘Housing for All’ by 2022”, said Hardeep Singh Puri, Minister of Housing and Urban Affairs. The Act is expected to give a boost to the private participation in rental housing as a business model for addressing the huge shortage in housing sector, the Ministry of Housing said.

The Act says that a security deposit equal to a maximum of two month’s rent in case of residential premises and maximum of six month’s rent in case of non-residential premises would have to be paid by the tenants.

The key features of Model Tenancy Act:

• It will balance the interest and rights of both the owner and tenant in an accountable and transparent manner.
• It will encourage the growth of rental housing.
• The Model Tenancy Act will provide a template for residential and commercial properties and model for urban and rural properties.
• It would take people from informal to specific contract arrangements between landlord and tenant.
• In case of dispute between landlord and tenant, a rent authority or a rent court or Tribunal would be available for speedy resolution.
• Tenant will have to pay a security deposit of two month’s rent for residential and six month’s rent for commercial property.
• The tenant will not be able to sublet a part of or the whole property.
• If a landlord has fulfilled all the conditions stated in the rent agreement like giving notice period as per the defined time frames and the tenant fails to vacate the premises after the expiry of tenancy or termination of tenancy, landlord is entitled to double the monthly rent for two months and four times after that.
• Landlord has to give a notice in writing three months before revising the prevailing or existing rent. The landlord cannot hike the rent in the middle of the tenancy period.
• Landlord cannot cut the power and water supply in case of a dispute with the tenant.
• Landlord need to give 24-hour prior notice to carry out repairs or replacement in the tenants premises.
• Landlord will be responsible for repair of structural damages and to undertake timely measures like whitewashing walls and painting doors and windows.

While the proposals of the Model Tenancy Act have been widely welcomed, implementation may not be that very simple. Like in the case with RERA, the fear is that states may choose not to follow guidelines, diluting the essence of the Model Act.

Model Tenancy Act viz-a-viz RERA may well become a process rather than an event and need to amend with time to reduce weaknesses before it becomes a force to work out with. The welfare objective of the existing tenancy laws, which are adequate in providing tenant protection, appears to be fading away when we have instances of tenants occupying the prime premises for meager rents.

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