The Indian Ministry of Housing and Urban Affairs recently drafted the ‘Model Tenancy Act’ (MTA), 2019. The Act has been introduced as a model since land is a state subject in India, which gives states the choice to either adopt it or reject it. It aims to strike a balance between landlords and tenants’ interests and rights, creating a transparent and accountable ecosystem for renting premises in an efficient and disciplined manner.
Key Features of the Model Tenancy Act
One of the primary attractions of the MTA is its robust grievance redressal mechanism. It consists of the Rent Authority, Rent Court, and Rent Tribunal to address any disputes that may arise between the landlord and tenant.
The Act gives landlords the freedom to charge rents in alignment with market rates, which are to be determined by respective state governments. It also proposes to limit the security deposit to two month’s rent at most for residential properties and at least one month’s rent for non-residential properties.
A very crucial feature of this new act is that no person shall lease or rent any property without written agreement after its implementation. This rule applies throughout the state, encompassing both urban and rural areas.
It emphasizes that landlords and tenants must inform the Rent Authority about the rental agreement. This provision prevents landlords from increasing the rent arbitrarily and protects tenants from whimsical evictions.
A Digital Platform for Compliance
The MTA will implement a digital platform in the local vernacular language for submitting tenancy agreements and other related documents. While this act will apply prospectively, it will not impact existing tenancies.
Anticipated Impact of the Draft MTA
The revised legislation is expected to boost private participation in rental housing, thereby addressing the housing shortage across the country. It caters to various society segments, including migrants, formal and informal sector workers, professionals, students, etc., enhancing access to quality rented accommodations.
By gradually formalizing the rental housing market, the act might bring relief to both tenants and landlords and lighten the burden of India’s litigation process.
According to the 2011 census, nearly 1.1 crore houses were vacant in India. The MTA aims to complement the ‘Housing for All’ vision by 2022 by opening these houses for rent. The draft seeks to unlock the potential of vacant houses in India by promoting transparency and accountability in the existing renting system, which balances property owners and tenants’ interests.
| Fact | Detail |
|---|---|
| Grievance Redressal Mechanism | Rent Authority, Rent Court, Rent Tribunal |
| Rent Alignment | Rents aligned with market rates; determined by respective state governments |
| Security Deposit Cap | Max two months’ rent for residential properties; Min one month’s rent for non-residential properties |
| Written Agreement | Leasing or renting properties need a written agreement after MTA implementation |
| Applicability | Applies throughout the state, urban and rural areas included |
About Pradhan Mantri Awas Yojana (PMAY)
Pradhan Mantri Awas Yojana (PMAY) is an Indian government initiative aimed at providing affordable housing. Under PMAY, the vision is to construct 2 crore homes for urban poor, including Economically Weaker Sections and Low Income Groups, by 2022. The scheme has four pillars: rehabilitation of slum dwellers with the private developers’ help using land as a resource, promotion of affordable housing for weaker sections through credit-linked subsidies, affordable housing partnership with public and private sectors, and subsidy for beneficiary-led individual house construction or enhancement.