Draft Model Tenancy Act, 2019

Why in News?

Last week, the draft Model Tenancy Act of 2019 was released. It aims to regulate rental housing by a market-oriented approach.

What is the need?

• As per the Census 2011, a count of 1.1 crore houses are lying vacant.
• The Model Act would bring these houses into the rental market and would promote the growth of the sector.
• The existing rent control laws discourage owners from renting out their vacant houses due to fear of repossession.
• When Housing for All by 2022 Mission was rolled out in 2015, it promoted only ownership housing — with no mention of rental stock.

How can the vacant houses be brought underrenting?

• By bringing transparency and accountability in the existing system of renting of premises.
• Bybalancing the interests of both the property owner and tenant in a judicious manner.

What are the provisions of the draft act?

• It stipulates a robust grievance redressal mechanism comprising of Rent Authority, Rent Court and Rent Tribunal.
• It proposes to cap the security deposit equal to a,
  1. Maximum of two month’s rent in case of residential properties and,
  2. Minimum of one month’s rent in case of non-residential property.
• No person shall let or take on rent any premises except by an agreement in writing.
• Applicability – Forwhole of the State i.e. urban and rural areas.
• Within 2 months of executing rental agreement, both landowner and tenants are required to intimate to the Rent Authority about the agreement.
• Within 7 days after the intimation, a unique identification number will be issued by the Rent Authority to the both the parties.
• A digital platform will be set up in the local vernacular language of the State for submitting tenancy agreement and other documents.
• It states to promote the creation of a rental housing stock for various income segments (i.e. migrants,students, professionals, formal and informal sector workers) mainly through private participation.

What are the Tenant and landlord rights?

• The Model Act sets acap onsecurity deposit to be paid by the tenant which protects them from heavy charges by the owner.
• It lists the kinds of repairs each party would be responsible for, with the proviso that money for repairs can be deducted from the security deposit or rent, if a party refuses to carry out their share of the work.
• Rent Court can allow repossession of the property by the landlord if the tenant misuses the premises, after being served a notice by the landowner.
• Misuse of the premises – Includespublic nuisance, damage, or its use for immoral or illegal purposes.
• If the tenant refuses to vacate, the landlord can claim double the monthly rent for two months, and four times the monthly rent thereafter.

What will happen to the existing Acts?

• The Model Act states that all state rent control Acts stand repealed.
• The land and urban development are state subjects, so the central Model Act is not binding on the states.
• The states and Union Territories will choose to repeal or amend their existing Acts.
• The Model Act would be applicable only to fresh tenancies and will not affect the existing tenancies.

Source: The Indian Express, PIB.