By filling multiple gaps in existing policies, the purpose of the Draft Model Tenancy Act of 2019 for both landlords and tenants is to make it more attractive. We analyze whether the new law will help India’s rental housing segment to get rid of its problems.
As the government pursues its ambitious dream of providing “housing for everyone” in 2022, he has presented a tenure bill to increase supply in the housing segment of the rental.
The purpose of the Model Lease Act of 2019 is to make fares more attractive for both the landlords and the tenants, which are currently in the regulatory policies of the rented accommodation section.
As a result of the difference in many policies, 11.1 million households were left vacant in urban India in 2011, even when the migratory population was struggling to find decent housing. Given that developers are currently on a big list without sales in the major cities of the country, the number of vacant homes in urban areas has increased dramatically between 2011 and now.
Model Tenancy Act 2019: Key Features
The law has implemented a number of measures, to toughen the rules and to make it attractive to landlords and tenants, to promote rental housing.
A ‘Rental Authority’ will be established under the Model Lease Act 2019
On the lines of real estate regulatory Draft Model Tenancy authorities established under the Real Estate Law (Regulation and Development), 2016, states can establish rental authorities in cities.
After its establishment, owners and tenants will have to appear before the authority to register the rental contract. For its part, the authority will set up a website to retain all data received in the form of rental agreements.
“No person shall, after the commencement of this Act, leave or rent any premises, except by written agreement, which shall be jointly reported by the owner and tenant to the rental authority in the manner specified in the First Schedule. For a period of two months from the date of the agreement, ”the policy document reads.
Hire a court/tribunal to resolve disputes under the model lease law
In the event of dissatisfaction, the contracting parties will first contact the rental authority to find a solution. If the disputed parties are not satisfied with the order of the right to rent, they can go to the rental court/tribunal to seek relief. These courts must approve an order within 60 days of receipt of the complaint.
Once rental courts are established, civil courts will not have jurisdiction over disputes relating to rental housing. ‘Only the rental court and any civil court will have jurisdiction to hear the Draft Model Tenancy requests related to disputes between the landlord and the tenant and the jurisdiction under section 30 establishes the law.
Model Lease Law: Provisions That Can Help Owners
To discourage excessive tenant migration
The policy states that tenants may pay the owners twice the rent for two months and four times the rent in the following month if they remain after the expiry of the rental contract.
For facilitating the eviction of tenants
Under the model policy, landlords can approach the income court to request eviction if tenants do not pay rent for two consecutive months.
To stop renting by tenants
Without the prior permission of the landlord, the tenant is not eligible to rent or rent for everyone.
Model Lease Law: Provisions that can help tenants
To prevent landlord intrusion
That whenever they want, they can go to the facilities of owners, there is a common complaint among those who live in rented houses. In order to prevent this from happening, the policy states that the owners will have to give written notice 24 hours prior to the facilities to be visited. In addition, they cannot pay a visit before 7 am. And after 8 pm
To limit the security deposit required by the owners
In cities like Mumbai and Bangalore, tenants have to deposit at least one year’s rent in security deposit. Proprietors of states adopting the policy cannot request a rent of more than two months as a security deposit.
To regulate the increase in rent by the owners.
During the entire term of the rental agreement, the owner may not increase the rent, unless some of those empowered to do so are explicitly mentioned in the rental agreement. The landlord should notify the tenant for three months in advance before increasing the rent.
Owner is responsible for structural maintenance of rented premises.
While the policy states that both parties will be responsible for maintaining the physical health of the property, the responsibility of structural maintenance will be on the owner.
How effective can model tenure law be?
However, despite its laudable provisions, the effectiveness of the model policy remains suspect. First, the land is a state issue and therefore, the state model is free to accept or reject the policy, which is in the process since the Prime Minister, led by Prime Minister Narendra Modi, the National Democratic Alliance (NDA). For the first time in 2014, the government was formed.
The rules are not binding, states are rarely in a hurry to accept them. “Two years after the law came into force, states are still busy creating authorizations under RERA.
Barring a few, most are still struggling to learn the ropes, ”said Brajesh Mishra, a Gurugram-based lawyer who specializes in property disputes. Mishra further says, “Many states do not show the desire to adopt politics because there are so many things involved in it.”
Developers may not be ready to participate in this housing segment even if the state sets the regulatory framework, despite the fact that they are sitting on a list of 1.13 billion rupees.
The reason for this is that rental yield, which is usually 2% to 3% annually, is not attractive enough. On the contrary, developers have to pay interest between 12% and 14% of the loan for project development. “Policy does not solve the problem of low rental Draft Model Tenancy performance. ANAROCK Property Consultants Chairman, Anuj Puri said that it is possible for builders to use their inventory stock for rental housing, but they will not go ahead for this housing segment.
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