MODEL TENANCY ACT 2021: A WAY TO CREATE EFFECTIVE RENTAL MARKETPLACE

Author:- Vivek Mahajan, Research Assistant All India Legal Forum

A Model Tenancy Act (MTA) 2021, which intends to make rent regulations more equal for both landlord and tenant and streamline the rental transaction, has been approved by the union government after years of planning and drafting. To meet the Pradhan Mantri Aawas Yojana’s goal of building 20 million dwellings for the urban poor by 2022, such a deed has become required.

Having 246.69 million households altogether, 68% of which were agricultural and 32% of whom were urban, the 2011 census reported that 63.67 million urban and rural families lacked suitable housing. Rental housing has mostly been a problem in India’s cities. But with the percentage of people residing in urban rental housing declining from 58% to 27% among 1961 as well as 2011, around 12% of urban homes remain unoccupied.

To appropriately address certain conditions, legislatures may create Model Acts as recommendations. One of these is the Model Tenancy Act 2021. One of the 66 state issues stated in the constitution, under which states have the sole authority to enact or repeal laws, is land including land-related rights, obligations, and regulations. Consequently, using MTA as a guideline, states are free to repeal, modify, or promote innovative rental legislation.

WHAT’S THE ACT REFLECTS:

The Model Tenancy Act was introduced keeping in view the various demands of the society, which are as follows:

• According to National urban rental housing policy, 2015 there was a huge scarcity of housing in the country. People were unable to buy personal accommodation and must depend upon the rental help.
• The existing Rent control laws were restricting the growth of rental housing and discouraging the landlords from renting out their vacant property with the risk of repossession.
• There was need to bring the transparency in the rental system of the economy and to provide security to both the parties, so that rental housing could be encouraged.
• Also, existing laws had limited scope of resolving the dispute arising among the parties of tenancy, with a reasonable period.

IMPORTANT CLAUSES WITHIN THIS ACT:

There are various provisions provided under this act, which are as follows:

• Rent Authority: Under this Act, the rent Authority has been specified as an officer who would collect the tenancy reforms and upload it.
• Rent court and Rent Tribunal at district level: Rent court would be setup with an aim for the dispute resolution, whereas Rent Tribunal would be considered as second medium of dispute resolution. It could be approached if the above mentioned ‘ Rent court’ do not provide satisfactory decision.
• Limited security and no cap on rent increment: The level of security amount demanded by landlord has been decided. Two Months’ Rent could be charged maximum as a security deposit in the case of Residential housing, whereas the figure is 6 Months’ rent in the case of commercial housing.

Also, there has been no cap on the level of rent that could be hiked by the landlord.

In Vishwant kumar vs. Madan Lal Sharma, 1953, it was observed that the right of a statutory tenant to pay rent not exceeding standard rent or the right to get standard rent fixed is a protective right and not a vested right and does not survive after the repeal of the Rent Act.

• Failure to pay the rent: Tenant has to vacate the house if (i) the agreed period of tenancy has been over with nonrenewal of existing deed, (ii) the deed of tenancy has been terminated by a notice or order.

On the failure of eviction of property after above situation, the tenant could be penalized by the landlord with the amount:

• Twice of monthly rent for the first two months
• Four times the monthly rent, if the non-eviction of property continues further.

In Parripati Chandrasekhararao v. Alapati Jalaiah, it was held that the protection provided by the Rent Act does not initiate any vested right in support of the tenant beyond the period of protection and when the protection does not exist, the normal relations of both the parties come into operation.

• Safety norms for the tenant: There are provided various mandatory conditions in the favor of Tenants. These are as follows:
• Landlord couldn’t refuse for the essential service and maintenance of the property
• Landlord couldn’t enter the property voluntarily anytime without giving a prior 24 hours’ notice to the tenant with a reasonable reason.
• Landlord couldn’t visit the property before sunrise and after sunset.
• Mutual responsibility: It is also mentioned that in some situations, there is a mutual responsibility of both the parties, i.e., landlord and tenant. For e.g., If there is a need for the urgent repair to property, tenant might also carry out the repairs required, and the amount could be adjusted in the rent payable to the landlord. There is no extensive list regarding this matter.

CONTENTIOUS CLAUSES:

The Model Tenancy Act is particularly concerned with the fine print of the rental contract, such as minor maintenance issues like scapegoating. While renters oversee plumbing services, faucet maintenance, and culinary appliance renovations, the renter is required to handle them. It might not be required to provide such specifics because it is the main structure.

Additionally, when submitting a tenancy contract, both the owner and renter must submit an Aadhaar card according to the Act. According to the Supreme Court’s ruling in K.S. Puttuswamy v. Union of India, this clause can be interpreted as infringing the right to privacy. According to the Court’s ruling, Aadhaar numbers must be necessary only when paying for a rebate, benefit, or service that comes from the Consolidated Fund of India. Making Aadhaar a requirement for establishing a lease might go against the ruling because doing so offers no governmental perks or facilities.

The transmission of information about rental agreements constitutes another incident of privacy rights being violated via MTA. It is not apparent from the Act regardless of wether personal information such an Aadhaar number, PAN, phone number, etc. would also be made public after enrollment with the Revenue Board and the issuance of a distinct character number.

CONCLUSION:

It is a well-established step taken by the government of India, by changing the past ruled Rent control Acts, into a new-born law, governing the rental markets, with an intention to redress their grievances within the reasonable period. In a catena of judgments including Prabhakaran Nair vs. State of TN, the Supreme Court observed that the laws of landlord and tenant must be made rational, humane, certain and capable of being quickly implemented and that the courts should be relieved of the heavy burdens of rent litigations.

Also, It would be better if the act study the matters discussed above and resolved the problems therefore, which could increase the accessibility to more individuals. Even though the presence of various limits to it, this act makes required changes in the rental market and achieved various objectives. The question of implement must be observed, although the present state is not very favorable and optimistic.

In the case of Nair v. State of T.N. 1959, the Supreme Court observed that the laws of landlord and tenant must be made reasonable, considerate, certain and capable of being quickly implemented and that the courts should be relieved of the heavy burdens of rent litigations.

A forward-thinking statute that considers the needs of both parties is the new Model Tenancy Act. Because it is a model legislation, its application won’t be effective until states amend their current rental laws. While the UP cabinet just enacted an ordinance adopting the new Storyline as it is, Maharashtra has chosen to execute the new Act’s terms only partially. Several states haven’t yet replied.

Several specialists, meanwhile, have argued that the Center should have also considered providing incentives to renters and renters in the form of grants and tax breaks, promoting public-private partnerships in estate investment administration, and improving access to credit for low-income groups. Funds will be attracted by such initiatives. Most people believe that the model Act is a step in changing the nation’s housing market, despite disagreements about whether it is pro- or anti-tenant.