The Union Cabinet passed the Model Tenancy Act (MTA) on June 2, 2021, in an effort to make the institution of tenancy more efficient and to protect the interests as well as the rights of the tenants and the owners. One of the main objectives of the Act is to create and stimulate a sustainable as well as inclusive rental housing market.
The MTA impacts renting of property for residential, commercial or educational purposes but excludes any premises rented out for industrial use and hotels, lodging houses, dharmshalas or inns. MTA is intended to have prospective application and therefore have no effect on any existing tenancy. Some key features have been enlisted below:
Key features of The Model Tenancy Act ,2021
Mandatory Agreement in Writing:
The Act mandates that the Agreement for tenancy must be in writing and submit such Agreement to the Rent Authority. The Act also mentions that the Rent Authority shall be required to put in place a digital platform to facilitate the submission and record of such tenancy agreements.
The MTA has put a maximum limit on the Security Deposit that maybe demanded by the Landlord for residential premises as rent payable for 2 months and for non-residential premises as rent payable for 6 months.
Responsibility for Repairs:
The MTA lays down the responsibilities of landlord and tenant related to repairs and damage to the rented premises. The Landlord has been made liable for all structural repairs including painting, changing and maintaining plumbing pipes, internal electrical wiring and other internal repairs. While the Tenant has responsibility towards repair and maintenance of equipment and fittings including drains, electrical appliances, switches, bathroom fittings, gardens or such other external repairs as mentioned in Schedule 2 of the MTA.
The MTA restricts the tenant from sub-letting the premises unless such sub-letting is done vide a supplementary agreement to the tenancy agreement which shall be submitted to the Rent Authority.
Rent Authority, Rent Court & Rent Tribunal:
The Act establishes Rent Authority to regulate renting premises and a Rent Court and Rent Tribunal for a speedy resolution of disputes. There will be a three-tier grievance redressal system for a streamlined and transparent dispute resolution. This will allow the aggrieved party to follow through with the Rent Authority then, Rent Court to the Rent Tribunal in a disciplined and orderly manner.
Enhanced Rent of Failure to Vacate:
The MTA has provided protection to the landlord from tenants unwilling to vacate the premises despite the termination or expiry of the Tenancy Agreement by making such tenants liable to pay twice the amount of rent for the first 2 months after expiry or termination and four times the rental amount in the event that such tenant continues to occupy the premises beyond 2 months of termination or expiry.
The MTA recognises the impact of a Force Majeure event and provides relief to the tenant under such events. As per the provision, in the event of expiry of a fixed term lease any tenant who is unable to vacate the premises due to occurrence of a Force Majeure event, shall be allowed to continue to reside in the premises for up to one month from the date of cessation of such event under the terms & conditions of the tenancy agreement. Further, the tenant has been provided protection for payment of rent in case of a Force Majeure event only if such event has rendered the premises uninhabitable. This waiver of rent shall continue until the landlord has restored the premises to an inhabitable state.
The State of Maharashtra currently has the Maharashtra Rent Control Act 1999 in operation, this Act already envisages certain features of the MTA for instance:
- Registration of a tenancy agreement is mandatory as per The Maharashtra Rent Control Act 1999.
- The Provision of consent of landlord for creation of sub tenancy is another feature of the MTA that is envisaged in the Maharashtra Rent Control Act 1999.
- Further, while the MTA clarifies in detail the division of responsibility between landlord and tenant in respect of repairs to the premises, the Maharashtra Rent Control Act 1999 emphasises the landlord’s duty to keep the premises in good repair, and provides redressal options for tenants in case of non-fulfilment of obligations by the landlord.
- The MTA establishes a Rent Authority to adjudicate the disputes similarly the Maharashtra Rent Control Act, 1999 lays down the provision for establishment of a Competent Authority for summary disposal of certain applications.
The key features of the Model Act crystallize provisions for several unresolved and disputed issues related to tenancy. States and Union Territories may adapt this model law by way of enacting fresh legislation or amending existing rental laws.