Know a model tenancy law for tenants and landlords



Whether you are planning to let out your property or find a house on rent, there’s good news in store for you. The recently drafted Model Tenancy Bill, 2019 has proposed a few measures that can address some of the reasons for disputes between tenants and landlords. The prevailing laws are skewed, giving more power to one party over the other.

For instance, there is no limit on the amount of security deposit a landlord can demand. For young earners, arranging an enormous deposit worth 10-12 months’ rent can be challenging. On the other hand, property owners have little control over tenants who do not vacate the property even after the agreement has expired.

The bill aims to bring both the parties on an equal footing. “The draft seeks to protect the interest of both tenants and owners,” says Mudassir Zaidi, Executive Director-North, Knight Frank India. Find out about the provisions of the draft legislation.

Regulator for disputes

The draft has proposed to set up a rent authority and rent tribunal that will specifically examine disputes related to tenancy, ranging from issues related to rent to a bigger dispute of non-vacation of premises. Currently, all such issues are taken up in small causes courts and civil courts. “The burden on the judiciary is so high that such cases take years to get resolved. Sometimes people don’t take up tenancy related matters with the court fearing the long legal battle. A specialized rent court will ensure speedy redressal of disputes,” says Sandeep Jhunjhunwala, Director, Nangia Advisors (Anderson Global).

The aggrieved party can take the matter further up to the rent court and rent tribunal. “All orders of the rent authority can be appealed before the rent court and all orders of the rent court can be further appealed before the rent tribunal if the party is not satisfied by the order at any level,” says Mukesh Jain, Founder, and Real Estate Specialist, Mukesh Jain & Associates.

Revision of rent

As per the draft bill, the landlord will have to send a notice to the tenant about the increase in rent three months’ prior to the revised rent coming into effect. “Unless otherwise agreed in the agreement, the landlord cannot unilaterally increase the rent. Three months’ notice will give the tenant ample time to look for another house if he doesn’t agree with the proposed hike,” says Ashoo Gupta, Partner, Shardul Amarchand Mangaldas. The tenant, on the other hand, will have to send a notice to the landlord to terminate the tenancy, failing which he will be deemed to have accepted the proposed hike in rent.

As for the rent amount, the rent authority will fix or revise the rent after the landlord or the tenant has filed an application with it. To ensure this happens, the draft also mandates the tenants and landlords to get into a written tenancy agreement and jointly submit it to the authority within two months. The documents should have details about the rent amount, tenure of tenancy and details of rent revision, if any, which will be reviewed by the authority to fix the rent.

Vacation of house

Current rules around vacation of property favour the tenants. The landlord cannot ask the tenant to vacate the property mid-term without giving a valid reason. On the other hand, there are no penal provisions for those who default on paying the rent or overstay after the agreement has expired. To resolve this, the draft has laid out that if the tenant does not pay the rent for over two months or some construction has to be done on the property, the landlord can ask the tenant to leave.

The draft has also proposed a compensation of twice the monthly rent if the tenant overstays for up to two months. This penalty will increase to four times the rent if he overstays for more than two months. As for tenants, they will have the right to leave before the agreement ends in case the premises becomes uninhabitable due to disrepair and the landowner refuses to carry out the repairs.

Cap on security deposit

A high security deposit is a major pain point when searching for a house on rent. While it is a moderate 2-4 months’ rent in cities like Delhi and Pune, in Bengaluru and Mumbai the deposit can be as high as 12 months’ rent. The draft has capped the security deposit to two months’ rent for residential properties and one month for commercial. However, this limit could prove to be insufficient for landlords if major damage is caused to the property. “In such a case, the owner can recover costs by approaching the rent authority. But the owner will have to bear the inconvenience of going through a legal process,” says Jhunjhunwala.

News Source: Economic Times, Url: https://bit.ly/2SPJtQe

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