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Model tenancy Act, 2020- All you need to Know

The housing sector is one of the most expensive sectors in India, especially in urban areas. Owning a house is a dream that everyone has, but not all of them are economically sound to achieve this dream. Therefore, the next best thing that one could do is renting a house. However, the existing renting laws were old and archaic and have not been amended in a long time. Therefore, either the tenant or the owner has found a way to get around the law by finding a loophole and exploiting it ever since. Moreover, looking at the present situation, there was a dire need for new renting law, which is when the Model Tenancy Act, 2020(hereinafter referred to as ‘The Act’) came into effect.

Why do we need the Model Tenancy Act, 2020?

As per the census conducted in 2011, there was 1 crore ‘vacant house’ that hasn’t been put up for rent, in the urban area. Moreover, the number of people looking to rent has also grown exponentially over the years as more and more people are shifting towards urban areas for livelihood. Therefore, the Government seeks to unlock the ‘vacant houses’ and grow a legal framework for the renting laws in India. Furthermore, to define the duties and obligations of both the tenant and the owner of the property. Therefore, it will be not out of place to state here that, the main objective of the Act is to bridge the gap between the tenant and the owner.

Essential Features of the Act

  1. The act establishes a legal framework for urban as well the rural areas.
  2. This act will take into account the tenancy related to commercial, educational, and residential use but, there are no provisions for industrial use in the Act.
  3. It was established practice amongst the owners to give their property for rent via oral agreement, just so that they could save some time and money. However, this Act abolishes this practice and directs the parties to have a proper written legal agreement.
  4. Furthermore, it will be mandatory for the parties to submit the tenancy agreement to the rent authority. For the convenience of the parties, this process will be carried out via a digital platform.
  5. Under this Act, the states shall establish a 3 tier redressal mechanism in case of any dispute between the landlords and tenant. Moreover, disputes related to the tenancy will no longer be dealt with by civil courts. Therefore, in case of any dispute, the parties should first approach the rent Authority and if the parties do not agree with the decision, then they can approach the Rent court. Further, the final remedy available to the parties is the rent tribunal.

Key legislation for the tenant

  1. The Act states that if the owner wants to increase the rent of the property, then the owner has to give notice to the tenant before such an increase, that to 3 months in advance. Earlier in some cases, the owner used to increase the rent according to his will, and the renter scummed to the pressure as they didn’t want to shift.
     
  2. This Act puts a cap on the deposit that the owner can take. Earlier the sum of deposit fluctuated anywhere between 8 to 12 months of rent agreed by both parties, however, in most cases, it was left to the discretion of the owner to decide the deposit of the property. But, now the Act clearly states that for residential properties the sum of the security deposit will be up to 2 months of rent and for non-residential properties, the sum of the security deposit will be not more than 6 months of rent.
     
  3. Under this act, the landlord will be responsible for activities like structural repairs except for the damage caused by the tenant, whitewashing of walls, and painting of doors and windows.
     
  4. Further under some circumstances when the parties are in dispute the landlord withholds the essentials from the tenant like the supply of electricity or water. However, the Acts states that essential service should not be withheld from the tenant in case of a dispute. In case of any repair work, the landlord has to give prior notice of 24 hours to the tenant.

Key legislation for the Owner

  1. Under the previous legislation, the eviction of tenants was a very long and tedious process. However, what this Act has done is made the eviction of tenants very easy. For instance, if the term of tenancy under the contract has expired and now the the tenant has to vacate the house and does not do the same and continues to reside then the owner can charge, for the first two months double of what they agreed upon, if still don’t vacate the property then the owner can charge 4 times the rent agreed.
     
  2. This Act further says that the tenant cannot carry out any structural change or assemble any permanent structure within the property, without the written consent of the owner.
     
  3. Under this Act, The tenant will be responsible for drain cleaning, switches, and socket repairs, kitchen fixtures repairs, replacement of glass panels in windows, doors, and maintenance of gardens and open spaces.
Under this act, the tenant cannot sublet the property without the permission of the owner.

Drawbacks
  1. Firstly this Act deals prospectively and does not take into account the existing disputes. This means that any dispute that arises after the formation of the act will only be dealt with.
  2. The act is optional for the states to implement as land and urban development are state subjects under schedule seven of the constitution. Therefore, there is always a fear that such a revolutionary step taken by the government will not be implemented by the state government, such an event occurred sometime back with Real Estate Regulation and Development Act (RERA).
  3. Lastly, adding to the aforementioned point, it will take a lot of time for the states to instill a new law into their systems because it’s a lot of work for the states, in order to smoothly transition from the old laws to implementing policies of the new law that too without any roadblocks.
Conclusion
This Act is revolutionary, but right now its success is dependent on a lot of external factors. However, it would be unfair to criticize such a revolutionary Act just on basis of its current situation, it is a fairly new act and has been enacted very recently. Therefore a lot of changes are yet to come and a lot of mistakes are yet to be corrected.

For now, it will be safe to say that if the Act turns out how the government wants it to be it would be a huge boon for the renting market in India, as the experts suggest that there is a huge opportunity for the government to generate revenue.

References
  1. The Model Tenancy Act, 2020
  2. https://economictimes.indiatimes.com/industry/services/property-/-cstruction/model-tenancy-act-implications-and-benefits-for-indias-rental-housing/articleshow/83198983.cms?from=mdr
  3. https://www.firstpost.com/india/explainer-the-model-tenancy-act-and-how-it-is-different-from-the-rent-control-act-of-1948-9680131.html
  4. https://indianexpress.com/article/explained/explained-what-is-the-model-tenancy-act-7342764/

    Award Winning Article Is Written By: Mr.Anurag Singh
    Awarded certificate of Excellence
    Authentication No: JL34709185731-07-0721

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