The effect of Model Tenancy Bill on owners and tenants.

By Abhay Shah, Realty Quarter

Whether you are planning to leave your property or discover a house on rent, there is excellent news for you. The lately formulated Model Tenancy Bill, 2019, suggested several measures that could cover some of the grounds for disputes between tenants and landlords. The current legislation is skewed, providing one party more authority over the other.

For example, the security deposit that a landlord can demand does not have a limit. It can be a challenge for young people to arrange a huge deposit worth 10-12 months’ rent. On the contrary, owners of the property have little control over tenants who are not leaving the property, even after the agreement has expired.

The bill seeks to equalize both parties. Mudassir Zaidi, Executive Director-North, Knight Frank India, states that the draft aims to safeguard the value of both tenants and owners. Find out what the draft legislation provides.

Regulator for Disputes.

The draft suggested that a rent authority and rent tribunal to be established which will examine tenancy conflicts, ranging from rent problems to major non-vacation conflicts. All of these problems are currently dealt with in small cause’s courts and civil courts. “The judiciary burden is so high; that it takes years for such cases to be resolved. People sometimes don’t deal with tenancy issues with a court because of the fear of the lengthy legal fight.” Sandeep Jhunjhunwala, Director, Nangia Advisors (Anderson Global) said that a specialized rent tribunal will ensure quick resolution of disputes.

The party concerned may bring the matter further before the rent court and the rent tribunal. Mukesh Jain, Founder and Real Estate Specialist, Mukesh Jain & Associates said, “All rental authority orders may be referred to the rent court, and each rent court order could be appealed to that rent tribunal unless the applicant is not satisfied by any order.”

Rent Revision.

In accordance with the draft bill, the landlord must give the tenant notice of the rental rise three months prior to the updated rental. “The owner cannot unilaterally raise the rent unless otherwise agreed in the agreement. The tenant will have enough time to search for another house by getting three months’ notice in advance unless it agrees with the proposed hike,” states Ashoo Gupta, partner, Shardul Amarchand Mangaldas. On the other side, the tenant must give the landlord a notice to terminate the tenancy, if not he is considered to have been approved the suggested rental increase amount.

With regard to the rent, after the landlord or tenant has submitted a request, the rental authorities will solve or revise the rent. The draft also obliges tenants and landlords to conclude a written Tenancy Agreement and send it to the Office within a period of two months to guarantee that this occurs. Details on the rent amount, tenure and information of a rent revision, if applicable, should be provided in the documents, which are checked by the authority.

Vacation of House.

Current laws on vacation of house favour the tenants. Without providing a valid reason, the landlord cannot ask the tenant to leave the estate mid-term. On the other hand, those who fail to pay the rent or overstay following the expiry of the agreement do not have any penal provisions. In order to solve this, the draft has handed down that the landlord can ask the tenant to go if the tenant does not pay the rent for more than two months or if construction has to be done at the property.

The draft also suggested a twice-monthly rent will be charged when the tenant overstays for up to two months. If he stays longer than two months, that penalty will rise to four times the rent. In the event of disrepair of the property and the landowner refuse to perform the renovations the tenants will have the right to leave before the Agreement finishes.

Limit on Security Deposit.

A huge security deposit is a big pain when looking for a rental property. The payment can be as big as the rent for 12 months in Bengaluru and Mumbai, even if it is moderate 2-4 months’ rent in cities like Delhi and Pune. The draft capped the security deposit for housing buildings for two months of rental and commercial for one month. “In this situation, by reaching the rent authority the owner can recover expenses. But a legal procedure must be taken care of by the owner,” says Jhunjhunwala.