On 2nd June, 2021 the Union Cabinet sanctioned the Model Tenancy Act, 2021 aiming towards a nationwide unified model structure for protecting the interests of tenants and landlords. To boost the real estate sector, this act approved by the Modi cabinet revises the mandatory tenancy agreement, payment of the rent, rights and obligations of landlord and tenant, and terms and conditions of the eviction process.The Model Tenancy Act, which is applicable for both residential and commercial tenancies, aims to improve rental yields by opening up vacant premises, build an ethical environment to instil fairness in rental agreements and avoid red-tapism. In October 2020, theMinistry of Housing and Urban Affairs proposed the draft Model Tenancy Act 2020 which included 47 sections and two schedules. To accomplish PM Narendra Modi’s “Housing for All by 2022” vision, the draft act comes prepared with the bill. The Model law “has been prepared with the objective of balancing the interests and rights of both the landlord and tenant; and to create an accountable and transparent ecosystem for renting the premises in a disciplined and efficient manner”.
Here we will discuss how this act is going to protect the interests of the landlordsand the tenants in detail.
Necessity of the Act
As per the 2011 census, over 1 crore houses in the urban belt were lying vacant and locked. In the past 10 years, it is assumed, the number of such vacant houses must have risen. The ministry of Housing and Urban Affairs says, “The existing rent control laws are restricting the growth of rental housing and discourage owners from renting out their vacant houses due to fear of repossession. One of the potential measures to unlock the vacant house is to bring transparency and accountability in the existing system of renting of premises and to balance the interests of both the property owner and tenant in a judicious manner.”
Applicability of the Model Tenancy Act in West Bengal
Although the Central Government has passed the Model Tenancy Act but it’s applicability to residential and commercial properties is limited, because it is just a “Model” law. This implies that the Act can only be seen as a prototype of the law that States and Union Territories in India can adopt. It is important to understand that land and tenancies arising out of it fall within the State List of the Seventh Schedule of the Indian Constitution. Accordingly, under Article 246 of the Indian Constitution it is for the State Governments to enact laws dealing with tenancies. For example, if the West Bengal government decides not to implement the provisions of the Model Tenancy Act, then no one can force them to do so. This is because the West Bengal government already has the West Bengal Premises Tenancy Act and similar other Acts dealing with tenancies within the State.
Features of the Model Tenancy Act
Let’s look at the legal implications of the Model Tenancy Act:
- The owner must give the tenant a three months notice period before increasing the rental amount.
- In case of a residential property, the tenant must pay two months of security deposit, whereas the security deposit is of six months for renting a commercial property.
- There is a penalty provision if the tenant refuses to vacate the premises after expiry of the tenancy agreement, wherein double the rental amount will be charged for two months and subsequently four times of the rental amount will be charged as rent.
- Owners can not withhold essential supplies like electricity and water connection to the tenants occupiedpremises. The owners will be responsible for structural repairing as well.
Tenants can be evicted on the following grounds:
- If the tenant disagrees to pay the rent
- If the tenant does not pay the arrears of rent within a month of a notice
- Any misuse of the premises
- Any permanent structural change in the premises without the owner’s consent.
- Under the Act there is also provision for compulsory rental agreements.