Model Tenancy Act

News: The Union Cabinet has approved the Model Tenancy Act (MTA). States and Union territories can now adopt the Model Tenancy Act by enacting fresh legislation or they can amend their existing rental laws suitably.

What was the need for such legislation?

  • Young, educated job seekers migrating to large metropolises often complain of onerous tenancy conditions and obscene sums of money as security deposits that they are asked to fork out to lease accommodation. In some cities, tenants are asked to pay security deposits amounting to 11 months of rent.
  • Also, some house owners routinely breach tenants’ right to privacy by visiting the premises unannounced for sundry repair works. Whimsical rent raises are another problem for tenants, many of whom complain of being squeezed as “captive customers”. Besides, Tenants are often accused of “squatting” on the rented premises, or trying to grab the property.

Major provisions of MTA

  • To ensure speedy redressal of disputes, the Act calls for establishing a separate Rent Court and Rent Tribunal in every state/UTs to hear appeals for matters connected to rental housing.
  • Only the rent court and no civil court will have the jurisdiction to hear and decide the applications relating to disputes between landowner and tenant and matters connected with it.
  • It calls for the disposal of complaints and appeals by the Rent Court and Rent Tribunals within 60 days.
  • It also seeks to establish an independent authority in every state and Union Territory for the registration of tenancy agreements. Under the Act, unless otherwise agreed in the tenancy agreement, the landlord will be responsible for activities like structural repairs except those necessitated by damage caused by the tenant etc. On his part, a 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, among others.
  • The Act will apply to premises let out for residential, commercial or educational use, but not for industrial use. It also won’t cover hotels, lodging houses, inns, etc. This model law will be applied prospectively and will not affect existing tenancies. It seeks to cover both urban as well as rural areas.
  • The Act says that a security deposit equal to a maximum of two month’s rent in the case of residential premises and a maximum of six month’s rent in the case of non-residential premises would have to be paid by the tenants.

Significance:

  • The authority will provide a speedy mechanism in resolving disputes and other related matters.
  • It will help overhaul the legal framework with respect to rental housing across the country.
  • It will enable creation of adequate rental housing stock for all the income groups thereby addressing the issue of homelessness.
  • It will enable institutionalisation of rental housing by gradually shifting it towards the formal market.
  • It is expected to give a fillip to private participation in rental housing as a business model for addressing the huge housing shortage.

Challenges ahead

  • While the proposals of the Act have been widely welcomed, their implementation may not be very simple.
  • The Act is not binding on the states as land and urban development remain state subjects. Like in the case of RERA, the fear is that states may choose not to follow guidelines, diluting the essence of the Model Act.
  • Also, the Model Act is prospectively applicable and will not affect the existing tenancies. The repeal of rent control Acts can be governed by political exigencies.
  • This may be a complicated process in cities like Mumbai, where tenants have occupied residential properties in prime areas for absurdly low rents.