Model Tenancy Act 2021

Model Tenancy Act 2021 : What changes for property owners and tenants, it’s aim, and need for the law

Model Tenancy Act 2021
Two minute reads :

The Union Cabinet approved the Model Tenancy Act in a bid to streamline the legal framework for the process of renting a property in India.

key features :

  • After enforcement of this Act, no person can let or take on rent any premises except by an agreement in writing.
  • The new Act will be applicable prospectively and will not affect existing tenancies.
  • A digital platform will be set up in the local vernacular language or the language of the State/Union Territory for submitting tenancy agreement and other documents.
  • Rent Authority will keep a tab on these agreements.
  • Tenant will continue to pay the rent even during the pendency of a dispute with a landlord.
  • If the tenant refuses to vacate, the landlord can claim double the monthly rent for two months, and four times the monthly rent thereafter.
  • Landlord will be responsible to repair structural damages and undertake measures like whitewashing walls and painting doors and windows.
  • Rent and duration of tenancy to be fixed by mutual consent between the owner and the tenant through a written agreement; no monetary ceiling.
  • The security deposit should be a maximum of two months’ rent in case of residential premises and up to six month’s rent in case of non-residential premises.
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Model Tenancy Act 2021

key points :

  • The Centre has claimed that the MTA act will balance the interest and rights of both the owner and tenant in an accountable and transparent manner.
  • The Act will encourage the growth of rental housing as it is a preferred option for different segments including migrant workers, professionals, and students.
  • The Model Tenancy Act will provide a model for urban and rural properties, as well as a template for residential and commercial properties.
  • It is an important piece of legislation that promises to ease the burden on civil courts, unlock rental properties stuck in legal disputes, and prevent future tangles by balancing the interests of tenants and landlords.

Aim :

  • The government says the Act aims to formalise the shadow market of rental housing, unlock vacant properties, increase rental yields, ease/remove exploitative practices, reduce procedural barriers in registration, and increase transparency and discipline.

Need for a law in this regard:

  • As per Census 2011, nearly 1.1 crore houses were lying vacant in the country and making these houses available on rent will complement the vision of ‘Housing for All’ by 2022.
  • The existing rent control laws are restricting the growth of rental housing and discourage the owners from renting out their vacant houses due to fear of repossession.
  • Young, educated job seekers migrating to large metropolises often complain of onerous tenancy conditions and obscene sums of money as security deposits that they are asked to fork out to lease accommodation.
Model Tenancy Act 2021
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Model Tenancy Act 2021

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