Gist of Model Tenancy Act Notes | Study Gist of Rajya Sabha TV / RSTV (now Sansad TV) - UPSC

Anchor: – Teena Jha

Participants:

1. Ajay Brahme, Advocate, Supreme Court
2. Sudhir Krishna, Former Secretary, Ministry of Urban Development, GoI

Model Tenancy Act

The Union Cabinet recently approved the Model Tenancy Act which aims to reform the real estate sector by streamlining renting procedures.

Background:

• The need for a tenancy reform arose in tandem with the passage of the PM Awas Yojana (Urban) where 20% of the 2 crore houses were to be reserved for renting purposes.

• In recent times, the Ministry of Housing & Urban Affairs has initiated Affordable Rental Housing Complexes (ARHCs), a sub-scheme under Pradhan Mantri AWAS Yojana – Urban (PMAY-U). This will provide ease of living to urban migrants/poor in the Industrial Sector as well as in the non-formal urban economy to get access to dignified affordable rental housing close to their workplace.
• As per Census 2011, more than 1 crore properties were lying vacant in the urban areas leading to huge housing shortages.

Model Tenancy Act Features

• The act mandates renting only by written rental agreements.
• It repeals age-old rent control acts to free up properties that have been locked with negligible rental leases for decades.
• The act sets up a grievance redressal mechanism for settling of disputes within 60 days. The system comprises Rent Authority, Rent Tribunal and Rent Court.
• There is no minimum monetary limit for the cases to be entertained.
• Formation of a digital platform in a local vernacular language to submit and register all rent agreements online.
• The act allows subletting the premises but with the prior consent of the landlord.
• No arbitrary eviction of the tenant by the landlord except in the cases of public nuisance, damage of property, use of the property for illegal purposes.
• The security deposit should not exceed 2 months’ rent for residential property and 6 months’ rent for non-residential property.
• In case of a Force Majeure event, the possession of the premises could continue until one month after the event ceases to exist.

Benefits:

• Unlocking of vacant houses for rental housing purposes.
• Promote private participation in rental housing as a business model for addressing the huge housing shortage.
• It will formalize the shadow market of rental housing, mend the exploitative practices and bridge the trust deficit between tenants and landlords by clearly delineating their obligations, thereby enhancing transparency in the sector.
• It’ll enable institutionalization of rental housing and promote uniformity in rental procedures with fixed guidelines for registration, grievance redressal and other functional operations.
• It balances the interests of both landlords and the tenants in a judicious manner.
• It promotes the security of tenure in extraordinary emergency situations.

Steps that need to be taken for successful implementation of the act:

• Since housing is a state subject in India, states need to be cognizant of the pitfalls in the housing sector and implement the model act at the earliest possible.
• Allocate a dedicated cadre to administer the real estate and rental industry.
• A database of internal migration needs to be created to assess the demand and supply of rental housing.
• A formula could be devised to link rent to the property circle rates in the areas and prevalent inflation in the economy.

Conclusion
The Model Tenancy Code will create a vibrant, inclusive and sustainable rental housing market in India and is surely a step in the right direction.