The Union Cabinet, chaired by Prime Minister Shri Narendra Modi has approved the Model Tenancy Act for circulation to all States and Union Territories for adaptation by way of enacting fresh legislation or amending existing rental laws suitably.
It will help overhaul the legal framework with respect to rental housing across the country, which would help spur its overall growth.
- The approved act will help in rebuilding the legal framework on rental housing in India which in turn boost overall growth.
- The main aim of the Act passed is to create a vibrant, sustainable, and inclusive rental housing market.
- It will help in creating adequate rental housing stock for all income groups and address the issue of homelessness.
- It will also enable the institutionalization of rental housing by shifting it towards the formal market.
- It will facilitate the unlocking of vacant houses for rental housing purposes and give a fillip to private participation in rental housing as a business model. This will help in addressing the huge housing shortage.
About Model Tenancy Act:
- The Model Tenancy Act, 2019 is a proposed tenancy law by the Government of India (GoI), designed to overhaul the tenancy market in India.
- The creation of the act was first announced in the budget speech of 2019 by finance minister Nirmala Sitharaman. It seeks to replace the archaic rental laws of India and to solve the housing availability deficit.
- The act will help in achieving the target of “Housing for All by 2022”.
The Model Tenancy Act seeks to implement the following rules:
- Formation of Rent Authority department.
- Residential housing security deposit is capped at two months and one month for non-residential tenancy.
- Penalty on tenants for refusing to vacate the premises after the tenancy agreement expires or is mutually terminated.
- The landlord must provide access to basic essentials and utilities, and cannot hike the property rent in the middle of an ongoing tenancy term.
- Every executed tenancy agreement has to be reported to the Rent Authority within two months, and a unique identification number will be issued.
- Terms of the agreement will be binding on the successors of both the landlord and the tenant.
- Tenants cannot sublet the property without permission from the landlord.
- Existing tenancies will not be impacted by the Act.