Ministry of Housing and Urban Affairs has prepared Draft Model Tenancy Act (MTA), 2020.
Need for such act
- As per Census 2011 around 110 lakh houses were lying vacant in urban areas. One of the main reasons for non-availability of these houses for rental purpose is the existing rental laws of the States/UTs, which discourage renting.
- The share of urban population has increased to 31.16% in 2011 as compared to 27.82% in 2001 and further urban population projected to be >50% by 2050.
Objectives of the Act
- balancing the interests and rights of both the landlord and tenant;
- to create an accountable and transparent ecosystem for renting the premises in a disciplined and efficient manner
Salient features of Model Tenancy Act:
(i) After commencement of MTA, no premises to be rented except by an agreement in writing on mutually agreed terms;
(ii) MTA to be applicable to residential and commercial tenancies;
(iii) MTA to be applicable to whole of the State/UT i.e. urban and rural areas;
(iv) Rent to be fixed by mutual agreement between landlord (lessor) and tenant (lessee);
(v) MTA to be applicable prospectively and the existing tenancies shall continue to be governed by the respective extant rental laws of the States/UTs;
(vi) MTA to provide for a fast-track quasi-judicial mechanism for adjudication of disputes;
(vii) MTA to be applicable to all tenancies with no monetary threshold;
(viii) The terms of agreement shall be binding upon successors of landlord as well as tenant for the remaining period of the tenancy agreement.
(ix) Sub-letting is not permitted without execution of supplementary agreement between landlord and tenant.
(x) If the term of tenancy ends at the time when locality (where rented premises is situated) experiences any force majeure event, the landlord shall allow the tenant to continue possession of premises for one month from the cessation of such force majeure event on the same terms of prevailing tenancy agreement.
(xi) Security deposit for residential premises shall not exceed two months’ rent and in case of non-residential premises it shall be as per the terms of tenancy agreement subject to a maximum of six-months’ rent. Security deposit shall be refunded by the landlord at the time of taking over vacant possession of the premises, after making due deductions, if any.
(xii) Recovery of possession of premises by the Landlord on certain grounds.
(xiii) Landlord is entitled for double the monthly rent for the first two months and thereafter, four times of the monthly rent in case of default by tenant to vacate the premises after termination of tenancy.