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Model Tenancy Act

  • Posted By
    10Pointer
  • Categories
    Polity & Governance
  • Published
    5th Jun, 2021

Context

After releasing the draft in 2019, the Centre has recently approved the Model Tenancy Act (MTA) to streamline the process of renting property in India.

Key features of the Act

  • Unlocking of vacant house: The Act will facilitate unlocking of vacant houses for rental housing purposes. As per Census 2011, more than 1 crore houses are lying vacant in urban areas across the country.
  • Balancing the rights of both landlords and tenants: The Act seeks to balance the rights of both landlords and tenants to promote rental housing. It is aimed at bridging the trust deficit between tenants and landlords by clearly delineating their obligations.
    • Monetary ceiling: There is no monetary ceiling under MTA, which enables parties to negotiate and execute the agreement on mutually agreed terms. It will give confidence to landlords to let out their vacant premises.
    • Mandatory agreement: MTA mandates for a written agreement for all new tenancies which are to be submitted to a Rent Authority.
    • Digital platform: A digital platform will be set up in the local vernacular language or the language of the state/UT for submitting the tenancy agreement and other documents.

What about existing tenancies?

  • MTA will be applicable prospectively and will not affect existing tenancies.
  • The rent and duration of the tenancy will be fixed by mutual consent between the owner and tenant through a written agreement.

How States can adopt the Act?

  • States can adopt the new act as it is by fresh legislation, as it is a state subject, or they can amend their existing rent acts suitably to factor in the new MTA.
  • States and Union Territories have MoUs signed with the Centre under the Pradhan Mantri Awas Yojana-Urban which has this provision.

Need for this Act

  • As per Census 2011, more than 1 crore houses were lying vacant in urban areas across the country and existing rent control laws are restricting the growth of rental housing as they discourage the owners from renting houses due to fear of not getting them back.
  • In absence of a model law, there are informal agreements with arbitrary clauses and often litigation arising out of disputes.
  • Both the tenant as well as the owner are often found at the wrong end of a bargain in informally drafted agreements.

How was this conceived (background)?

  • The Model Act has been in the making since 2015, but has been held up on this point.
  • In 2015, before the Housing for All by 2022 Mission (Pradhan Mantri Awas Yojana-Urban) was launched, it was decided that 20 per cent of the two crore houses that were to be created should be exclusively for rent.