The Union Cabinet on Wednesday approved the Model Tenancy Act to be sent to the States and Union Territories to enact legislation or amend laws on rental properties. The meeting was chaired by Prime Minister Narendra Modi.
“It will help overhaul the legal framework with respect to rental housing across the country, which would help spur its overall growth…It will enable creation of adequate rental housing stock for all the income groups thereby addressing the issue of homelessness,” a government statement said.
The model Act, if passed by the States and UTs, would prescribe the norms for lease agreements, deposits, dispute handling and other aspects of rental properties.
“The 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 government said.
Among the provisions in the model Act is a cap of two months rent on the security deposit to be paid by tenants for residential properties and six months rent for non-residential spaces and appointment of a rent authority to settle disputes in each district. The Act also makes it mandatory for there to be a written agreement between the property owner and the tenant.
The draft Act had been published by the Union Housing and Urban Affairs Ministry in July 2019 and sent to the States and UTs for feedback.