'Security Deposit Limited To 2 Months For Residence; Enhanced Rent After Tenancy Period' : Key Features Of Draft Model Tenancy Act

The Union Cabinet, on Wednesday, approved the Model Tenancy Act.Now, this Model Act will be circulated to all States / Union Territories for adaptation by way of enacting fresh legislation or amending existing rental laws suitably. According to the Government, 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. Model Tenancy Act will enable institutionalisation of rental housing by gradually shifting it towards the formal market. The Model Tenancy Act will facilitate unlocking of vacant houses for rental housing purposes. It is expected to give a fillip to private participation in rental housing as a business model for addressing the huge housing shortage.", the press release issued by the Government reads.The stated objective of the Model Act are To establish Rent Authority to regulate renting of premises To protect the interests of landlords and tenants To provide speedy adjudication mechanism for resolution of disputesThe key takeaways are:Enhanced rent to be paid by tenant if he refuses to vacate after tenancy period expiresSecurity deposit limited to two months rent in case of residential tenancyInformation about tenancy agreement to be given to Rent Authority, which will be conclusive proof of the factsRent Courts/Tribunal to dispose cases/appeals within a period of sixty daysLandlord and Tenant Definitions"Landlord" means a person who receives or is entitled to receive, the rent of any premises, on his own account, if the premises were let to a tenant. It includes (i) his successor-in-interest; and (ii) a trustee or guardian or receiver receiving rent for any premises or is entitled to so receive, on account of or on behalf of or for the benefit of, any other person such as minor or person of unsound mind who cannot enter into a contract."Tenant", means a person by whom or on whose account or on behalf of whom, the rent of any premises is payable to the landlord under a tenancy agreement. This includes any person occupying the premises as a sub-tenant and also, any person continuing in possession after the termination of his tenancy..No person shall let or take on rent any premises except by an agreement in writingNo person shall, after the commencement of this Act, let or take on rent any premises except by an agreement in writing, which shall be informed to the Rent Authority by the landlord and tenant jointly, in the form specified in the First Schedule within a period of two months from the date of tenancy agreement.This shall be informed to the Rent Authority by the landlord and tenant jointly within a period of two months from the date of tenancy agreement (Form given in schedule 1 of the Act). This information provided shall be conclusive proof of the facts relating to tenancy and matters connected therewith. In the absence of any statement of information, the landlord and the tenant shall not be entitled to any relief under the provisions of this Act.Enhanced Rent to be paid by Tenant if he fails to vacate the premises at the end of tenancy Every tenancy entered into after the commencement of this Act shall be valid for a period as agreed upon between the landlord and the tenant and as specified in the tenancy agreement. The tenant may request the landlord for renewal or extension of the tenancy, within the period agreed to in the tenancy agreement, and if agreeable to the landlord, may enter into a new tenancy agreement with the landlord on mutually agreed terms and conditions. Where a tenancy for a fixed term ends and has not been renewed or the tenant fails to vacate the premises at the end of such tenancy, then such tenant shall be liable to pay an enhanced rent to the landlord as provided in section 23. Section 23 provides that, such tenant shall be liable to pay the landlord (a) twice the monthly rent for the first two months; and (b) four times the monthly rent thereafter till the tenant continues to occupy the said premisesLimits on Security DepositsThe security deposit to be paid by the tenant in advance shall (a) not exceed two months rent, in case of residential premises; and (b) not exceed six months rent, in case of non-residential premises.Grounds for evictionA landlord can file an application for eviction of tenant before Rent Court invoking the following grounds: (a) Non Payment of Rent: The tenant does not agree to pay the rent payable under section 8; (b) Non Payment of Rent Arrears: The tenant has not paid the arrears of rent and other charges payable in full as specified in sub-section (1) of section 13 for two consecutive months, including interest for delayed payment as may be specified in the tenancy agreement within a period of one month from the date of service of notice of demand for payment of such arrears of rent and other charges payable to the landlord in the manner provided...

'Security Deposit Limited To 2 Months For Residence; Enhanced Rent After Tenancy Period' : Key Features Of Draft Model Tenancy Act

Ashok Kini

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