On June 2, the Cabinet approved the Model Tenancy Act to be rolled out to all States / Union Territories for adoption with the aim of opening vacant homes for rental housing and helping to close the trust that exists between tenants and landowners by clearly defining their obligations. It also seeks to open up vacant housing by renting and emphasizes the participation of private companies in the rental model.
The new law has several potential provisions to transform the rental housing market. The key elements of the law are:
- The tenant will offer a rental amount of 2 months rental for the property and a six-month maximum rental of the commercial property as a security deposit
- A written agreement between the landlord and tenant is compulsory
- The landlord cannot renew the rent between the lease term and the three-month notice to be issued prior to the rent review.
- The homeowner is responsible for repairing the damage to the building.
- The tenant is responsible for repairs including kitchen utensils, glass panels, maintenance of open spaces; must notify the landlord of any damage that has occurred in the area
- Homeowners cannot evict tenants during the contract and stop providing essential services such as energy and water
- The landowner is entitled to double the monthly rent for 2 months and 4 times the monthly rent thereafter if the tenant resides on the land or has completed the lease
- The tenant can only enter the property with the first permission of the property owner
- Establishment of Employment Courts by the provinces to resolve disputes within 60 days of receiving an appeal
In cities such as Mumbai and Bengaluru, homeowners demand that employers set at least one annual tax as a security deposit. This makes hiring almost impossible for a large segment of the working population. The Act makes the role of players living together stronger by being the face of property, which avoids rental rental in the middle of the year, cutting off or withholding valuable goods or services. On the other hand, co-existence is a savior for landowners in terms of rent collection, expropriation at the end of the lease term.