After finance minister Nirmala Sitharaman declared that the government considered to launch numerous reformatory actions to encourage rental housing while presenting Budget 2019-20, on July 10, 2019 the housing ministry placed in public domain for propositions, a policy that will be acting as the model act for states and union territories (UTs) to legalize this segment. What was anticipated in the Draft Model Tenancy Act, 2015 has been taken forward in the Model Tenancy Act, 2019.
The policy states that transparency should be taken into the housing sector by setting the responsibilities of landlords and tenants to encourage rental housing at a time when the government is rushing its Housing-For-All-By-2022 target. Let’s examine the key terms of Engagement for landlords, tenants, and the sector.
Key Terms Of Engagement
Security deposit: The Landlords cannot ask for more than two month’s rent as a security deposit. And it will be a mandate that this deposit needs to be returned to the tenant.
Rent revision: As per the policy, the landlord cannot increase the rent for the time period for which the rent agreement is made, if a regarding the same has been mentioned in the agreement. Before revising the rent, the landlord would have to give written notice of 3 months in advance. If expenditure has been incurred on account of improvement, addition, or structural alteration, the Landlords can increase the rent which does not include ‘repairs.’
Entering the rented premises: As per the model tenancy act 2019, before entering the premises, the landlord at lease need to give 24 hours’ notice in advance to the tenant. The visiting time must fall between 7 am to 8 pm.
Maintenance of the rented premises: Maintaining the property is the responsibility of both parties. Individual responsibility for the specific damages must be mentioned in the rent agreement. There is a clause that if the responsibility of the repair lies to the landlord and if he/she refuses to do that, then the tenant has the right to deduct the repair amount from the monthly rent. In a reverse situation, the landlord has the right to deduct the amount from the security deposit. There can be a possibility that the repair amount is bigger than the security deposit then the tenant needs to pay the balance amount to the landlord.
Subletting: Without the prior permission of the landlord, Tenants cannot sublet part of the whole of the rented building. If the permission has been granted, then the tenant cannot charge rent more than what they are paying themselves.
Eviction: If the tenant fails to give rent for 2 months, the landlord could move the rent court. If the tenant manages to correct the situation within the one-month notice, then he/she can stay. In case the property is not fit for habitation, after serving 15 days notice period the tenant would be within his right can leave it.
What Will Be The Impact Of The Model Tenancy Act 2019 In The Rental Housing Market?
The government estimated that approximately over 1 crore fit-for-renting properties are vacant across urban India because of the lack of transparency. Property owners fear from letting out their premises because of uncertainty in the rental market. This leads to limited supply which ultimately results in sky-high rents. By putting the Model Tenancy Act 2019 into existence the rental housing segment will reach it’s potential. If the landlords would be confident enough that government policy is safeguarding their property when they rent it, this would make it very easy for tenants to get a perfect rented property in metropolitan cities, where it’s just next to impossible to find rental accommodation.
If the act comes into existence soon, you will be needing a platform that can help you with the newly added rules in the tenancy act. RentScribe can be your companion, as it is built keeping in mind all the rules and requirements of renting.
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