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Two years since the release of its draft proposal, the Narendra Modi-led Cabinet on Wednesday, 2 June, approved the Model Tenancy Act (MTA) in a bid to make the process of renting property in India more efficient, and boost the rental economy in the estate sector.
In an official statement, the Centre said the MTA “will facilitate the unlocking of vacant houses for rental housing purposes. It is expected to give a fillip to private participation in rental housing as a business model for addressing the huge housing shortage.”
According to a census from 2011, over 1 crore houses in urban areas were lying vacant.
Under the MTA, which seeks to cover both urban and rural territories, no individual will be able let or rent any premises except by an agreement in writing.
As per the government, the Act will aid in institutionalising rental housing through a gradual shift of rental property marker towards the formal market.
It will also aim to create a vibrant, sustainable and inclusive rental housing market in the country and will enable creation of adequate rental housing stock for all the income groups, thereby addressing the issue of homelessness, the government stated.
The MTA will not impact the existing tenancy agreements, and will only be applicable prospectively.
The MTA acknowledges areas of disputes between the landlord and the tenant, and addresses factors like the need for a formal rent agreement, a cap on the security deposit, rate of rent increase, and curbs on arbitrary eviction.
The streamlining of the rental market will benefit the landlords as proposed rental court can allow repossession of the premises if the tenant misuses the property after being served a notice.
As per the Act, misuse of the premises are defined as public nuisance, damage, or use for “immoral or illegal purposes.”
Additionally, provisions in case of a tenant refusing to vacate the property have also been made clear in the Act and even if a dispute is pending before the rent court, the tenant will be required to pay the rent.
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Published: 04 Jun 2021,04:05 PM IST