Cabinet approves Model Tenancy Act: What you need to know about renting properties

New Delhi: The Union Cabinet on Wednesday approved the Model Tenancy Act under which separate rent authorities, courts and tribunals will be set up in districts to protect the interest of both the owner and tenant.

For residential premises, tenants will have to submit security deposit of maximum two months' rent, while in case of commercial properties, six months' rent will have to be deposited.

States and union territories can adopt the Model Tenancy Act by enacting fresh legislation or they can amend their existing rental laws suitably.

Key points from the Model Tenancy Act:

• For residential premises, tenants will have to submit security deposit of maximum two months' rent.

For commercial properties, six months' rent will have to be deposited.

• The Act mandates for written agreement for all new tenancies, which will have to be submitted to concerned district 'Rent Authority'.

• The MTA will be applicable prospectively and will not affect existing tenancies.

• Rent and duration of tenancy will be fixed by mutual consent between owner and tenant through a written agreement.

• The Act says that no landlord or property manager can withhold any essential supply to the premises occupied by the tenant.

• According to the ministry, tenant will not be evicted during the continuance of tenancy agreement unless otherwise agreed to in writing by both the parties.

• Under the Model Tenancy Act, unless otherwise agreed in the tenancy agreement, the landlord will be responsible for activities like structural repairs except those necessitated by damage caused by the tenant, whitewashing of walls and painting of doors and windows, changing and plumbing pipes when necessary and internal and external electrical wiring and related maintenance when necessary.

• The tenant will be responsible for drain cleaning, switches and socket repairs, kitchen fixtures repairs, replacement of glass panels in windows, doors and maintenance of gardens and open spaces, among others.

• If the landlord proposes to make any improvement in or construct any additional structure on any premises, which has been let out to a tenant and the tenant refuses to allow it, the landlord can make an application in this behalf to the Rent Court.

• The state government and union territories, in consultation with the jurisdictional high court can appoint district judge or additional district judge as 'Rent Tribunal' in each district.

Act to encourage renting out vacant houses: govt

Union Housing and Urban Affairs Minister Hardeep Singh Puri said that the move will help overhaul the legal framework with respect to rental housing across the country.

In a statement, the government said that it is expected to give a fillip to private participation in rental housing as a business model for addressing the huge housing shortage.

"The Union Cabinet, chaired by Prime Minister Shri Narendra Modi, has approved the Model Tenancy Act for circulation to all states/union territories for adaptation by way of enacting fresh legislation or amending existing rental laws suitably," the statement stated.

The Act will enable institutionalisation of rental housing by gradually shifting it towards the formal market, the government said.

"The Model Tenancy Act aims at creating a vibrant, sustainable and inclusive rental housing market in the country. It will enable creation of adequate rental housing stock for all the income groups, thereby addressing the issue of homelessness," it stated.

The Act will facilitate unlocking of vacant houses for rental housing purposes, it said, adding that it is expected to give a fillip to private participation in rental housing as a business model for addressing the huge housing shortage.

(With PTI inputs)