A Peek On The Model Tenancy Act

• Published date: 08 June 2021
• Subject Matter: Litigation, Mediation & Arbitration, Real Estate and Construction, Arbitration & Dispute Resolution, Landlord & Tenant - Leases
• Law Firm: Singh & Associates
• Author: Neeraj Dubey and Shubham Aggarwal

The Model Tenancy Act, 2021 ("Model Act") was recently approved by the Cabinet and circulated to all the States and Union Territories for their adoption. The Model Act aims to establish a Rent Authority to regulate renting of premises and to protect the interests of landlords and tenants and to provide speedy adjudication mechanisms for resolution of disputes and connected matters. On the political front, the Model Act seeks to fulfil its objective of housing for all under the Pradhan Mantri Awas Yojana. This piece analyses the scheme of the Model Act which is as follows:

Applicability: The Model Act applies to any building, which is let on rent for the purpose of residential or commercial use except hotel, lodging house, dharamshala, inn and for industrial use but includes garden, garage or closed parking area, vacant land, grounds and out houses, if any, appertaining to such building or part of the building and fitting to such building or part of the building for the more beneficial enjoyment thereof. The Model Act does not apply to Government owned premises, or premises owned by religious or charitable institutions, or to premises owned by organizations given on rent to its employees as part of service contract. The Model Act will apply prospectively and will have no effect on the existing tenancies.

Tenancy Agreement: The Model Act prescribes that any letting out or taking on rent of a property shall only be done through a written agreement, which must be informed to the Rent Authority within a period of two months from the date of the tenancy agreement. The Rent Authority will provide a unique identification number to the parties and upload details of the tenancy agreement on its website in local language. The tenancy agreement shall govern the duration of tenancy and rent payable and any revisions thereof, among other aspects. Any dispute relating to the revision of rent shall be resolved by the Rent Authority. In cases where the landlord refuses to accept rent or refuses to give a receipt for rent for two months, the tenant may deposit the rent with the Rent Authority. The Model Act limits the security deposit to be paid by the tenant to a maximum of two months' rent in case of residential premises and a maximum of six months' rent in case of non-residential premises. The Model Act prohibits the tenants from subletting or transferring its rights in the tenancy agreement. In cases where the subletting or the transfer is done by way of a...