EXPLAINED: MODEL TENANCY ACT, 2021

This Article is written by Madhvi  student of UILS, Panjab University. CHANDIGARH.

INTRODUCTION

Through the Pradhan Mantri Awas Yojana – Urban (PMAY-U), the government plans to provide Housing for all by 2022. According to the survey of 2011, almost 25 millions of the country’s residences are unoccupied. The data shows up to 95 percent of vacant dwellings are in decent conditions. Most of the population opts for renting an accommodation instead of buying it, which led to the increased conflicts between landlord and tenants. The fear of repossession and the lack of laws governing the rent control discourages the landlords to let out the unoccupied dwellings.

To bridge the difference between tenant landlord relationship and better transparency and accountability for renting spaces, the  Union Cabinet on June 2, 2021 approved The Model Tenancy Act, 2021 (MTA) replacing the Rent Control Act, 1948, which continues to govern tenancy in different states. MTA  revamps the legal outline relating to renting across the country which will encourage its overall growth. This Act aims at creating a comprehensive and sustainable market of housing for all the income groups.

This article will provide insights of certain important provisions of the Model Tenancy Act.

OBJECTIVES OF THE ACT

The Model Tenancy Act, 2021 lay down following objective:

  • To establish a Rent Authority to regulate renting of premises,
  • To protect the interest of Landlords and Tenants,
  • To provide a speedy adjudication mechanism for the resolution of disputes,
  • Enabling formalization of the rental housing market, and
  • Encouraging private participation in the sector,

Moreover, these laws are applicable prospectively. The land being the matter of state, it is not compulsory for states to implement it. The UT and States can implement the Model Tenancy Act, by enacting new laws or amending their existing rent laws, whatever is suitable.

APPLICABILITY (Section 3)

The Act covers all  the tenancies rented or leased for residential, commercial or educational purposes. It does bring in its ambit the premises for industrial use. The Act does not apply to premises owned by central or state government, government undertaking, statutory body, universities or organizations that have rented out premises to its employees as part of their contract of service and premises owned by religious or charitable institutions or trusts registered under the law of the State/U.T.

TENANCY AGREEMENT (Section 4)

The tenancy agreement has to be in writing. The execution of the agreement has to be informed to rent authority by the tenant and landlord jointly within two months from the date of  agreement. In case they fail to inform the Rent Authority, they have to bring it to their notice within one month from date of expiry of limitation. Upon notification the authorities provide the parties with a unique identification number and their details of agreement are uploaded in vernacular of states/ UT language within one week.

PERIOD OF TENANCY (Section 5)

The period of tenancy would be as agreed between the Landlord and Tenant as specified in the tenancy agreement. If the tenant wants to renew or extend their tenancy within the period agreed in the tenancy agreement, it can be done if the landlord agrees. They may enter into a new agreement on mutually agreed terms .

When the tenancy agreement expires and is not renewed or upon refusal to vacate the premises the tenant will have to pay enhanced rent to the landlord.

FORCE MAJEURE

Force majeure here means a situation of war, droughts, flood, earthquake or any other natural calamity.

The locality where the premises is let out  is affected by a force majeure, the landlord is bound to allow the tenant to continue possession of rented premises for one month from ending of such event, even after the expiry of tenancy terms.

SECURITY DEPOSIT (Section 11)

The Act has put the limitation on the security deposits to be charged by landlords. Distinction between commercial and residential has been made. A tenant has to pay two months’ rent as deposit in residential premises and 6 months’ rent in case of non residential property. This amount would be returned on the day of taking over vacant possession after deducting liability of the tenant, if any .

RENT DEPOSIT AND RENT REVISION

As per Section 14, in case of dispute or  refusal by the landlord to accept the rent the tenant can deposit rent with the Rent Authority within prescribed manner or if tenant is unable to decide whom to pay rent, then also it can be paid to Rent Authority.

The rent and its revision should be in accordance with the agreement. However, if any expenditure has been incurred by the landlord for making improvements, addition or structural alteration (not including repairs he is bound to make) in the property acquired by the tenant, then increased rent can be charged as agreed by the tenant and landlord  prior to the start of such changes. The increased rent can only be charged after one month of completion of such work.

In case there arises a dispute regarding the revision of rent, it should be adjudicated by the Rent Authority.

SUB-LETTING PREMISES (Section 7)

No tenant can sublet the whole or part of premises which they held as tenants. They can’t transfer or assign their rights in tenancy except by entering into supplementary agreement. Rent Authority should be informed about subletting agreement  of existing tenancy within two months from date of execution of such agreement.

MAINTENANCE OF PROPERTY (Section 15)

The landlord and tenant, both shall keep good care of the premises. Except for normal wear and tear, both will be responsible for the maintenance of premises.

  • If a tenant refuses to carry out repairs, the landlord may carry out repairs and deduct the amount from the security deposit, the tenant must pay back the same amount incurred within one month to the landlord .
  • In cases where the landlord refuses to carry out repairs, the tenant may carry out repairs and deduct the amount from the rent of successive months. In any case, deduction should be more than 50 percent in any month’s rent.
  • When the premises are uninhabitable and the landlord does not repair even after notice in writing the tenant may vacate the premises giving 15 days notice.
  • If the premises is uninhabitable due to an event of force majeure, the landlord cannot charge rent from the tenant until the premises is repaired.

RESPONSIBILITY OF  TENANTS

During tenancy the tenant shall not intentionally damage the premises. He should inform the landlord in writing if any damage occurs. The tenant has responsibility to keep reasonable care of the premises to keep it habitable.

ENTRY BY LANDLORD

The tenants must be informed 24 hours before entering into the premises . This notice could be in electronic form also. The land owner cannot enter before sunrise or after sunset. The reasons for visiting should be stated in the notice.

WITHHOLDING ESSENTIAL SERVICES (Section 20)

The landlord or property manager by themselves or through others withhold the supply of essential services. These services include cooking gas, electricity, water, communication and  sanitary services etc. If Rent Authority upon investigation of complaint of withholding services and after giving opportunity of hearing may award compensation capped at two month rent by the person responsible for withholding services.

EVICTION AND RECOVERY OF POSSESSION OF PREMISES (Section 21)

The tenant cannot be evicted while the agreement is continuing, unless there is written agreement to it. However, tenants can be evicted during continuance of agreement by the Rent Court upon the application made to it by Landlord. there are following grounds :

  • The tenant has not paid the rent.
  • The tenant has not paid arrear of rent for two months consecutively.
  • The tenant has parted the possession of the premises, whole or any part without the consent of the l
  • The tenant continued to misuse premises even after notice from the landlord.
  • When the landlord has to carry out repairs in part where the tenant
  • When a tenant has carried out any structural change in premises without permission of the landlord.

EVICTION AND RECOVERY OF POSSESSION OF PREMISES (in case of death of landlord)

In case of death of the landlord, if Rent Court is satisfied that the legal heir of the deceased has a bona fide need of premises let out on rent, the Court may order the tenant to hand over the vacant possession to heirs of the deceased as per Section 22 of the Act.

REFUSAL BY TENANT TO VACATE (Section 23)

If the tenant refuses to vacate the leased premises upon expiration of tenancy agreement or on termination of tenancy by order or notice, the tenant shall  be liable

  • to pay twice the monthly rent for the first two months.
  • four times the monthly rent thereafter till he continues to stay.

GIVING UP PREMISES BY TENANT (Section 29)

When a tenant wishes to vacate the rented property, he must provide the landlord with the notice minimum one month before vacating the premises. This time period is applicable in those cases where the notice period is not predetermined in the rental agreement.

RENT AUTHORITY

With the approval of the state government / U.T. / Administration, District Collector or District Magistrate shall appoint an officer not below the rank of deputy collector, to be the Rent Authority in jurisdiction. Person aggrieved of rent authority may appeal in rent court within 30 days from order of rent authority.

RENT COURTS AND TRIBUNALS

An Additional Collector or Additional District Magistrate or an officer of equivalent rank appointed is to be appointed as Rent Court. District Judge or Additional District Judge may be appointed by the state government/UT Administration as Rent Tribunal in each district. Both, the Rent Court and the Rent Tribunal are bestowed with the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 for discharging their functions.

PROCEDURE FOLLOWED IN RENT COURT AND RENT TRIBUNAL (Section 35)

  • The Rent Courts and Rent Tribunals, which shall be guided by the principles of natural justice and shall have power to regulate their own procedure in the following manner:
  • A landlord or tenant may make an application before accompanied with an affidavit and documents .
  • The court or tribunal then issues notice to the opposite party along with copies of application , appeal or documents.
  • The opposite party then files a reply accompanied by all documents , after serving a copy of the same to the applicant.
  • The applicant may also file a rejoinder , if any, after serving a copy of the same to the applicant.
  • The rent court or tribunal as the case may be , then shall fix a date of hearing and may hold summary inquiry as necessary.

The Rent court or Rent Tribunal may dispose of the case quickly not exceeding sixty days from date of application.

APPEAL TO THE RENT TRIBUNAL (Section 37)

The aggrieved person may prefer to appeal against the order of Rent Court in Rent Tribunal in jurisdiction of premises, within a period of thirty days from date of that order. The Rent Tribunal  shall serve notice to respondent and fix hearing within thirty days of serving  that notice.

The appeal shall be disposed within sixty days from such date of service of notice.

CONCLUSION

The Act provides the regulatory framework, also the act is not mandatory, states are free to adopt by amending legislation suitably. Further the three tier dispute redress is appreciable but it means putting more human resources from the already burdened judiciary. Certain provisions do not provide limitations. The concerns of privacy arises as for unique identification number documents have to be submitted which include Aadhaar number. Matter regarding documents to be submitted or utilization of those documents should be addressed to make act suitable and considerate.

REFERENCES

https://tytpartners.in/2021/06/05/the-model-tenancy-act-2020/#_ftn2