Draft model tenancy law proposes cap on security deposit, appointment of rent authority

July 11, 2019 10:48 pm | Updated June 08, 2020 01:20 pm IST

The Centre has proposed a model tenancy law that States and Union Territories can enact in order to regulate renting of premises, including setting a maximum of two months' rent as security deposit, a three-months notice for hiking rent and appointment of rent authorities.

The draft of the Model Tenancy Act, 2019 was put in the public domain on Wednesday night by the Union Housing and Urban Affairs Ministry, an official said, adding that comments had been sought from the public, after which the draft would be sent to the Cabinet for its nod. A statement by MoHUA on Thursday said comments were sought till August 1. Finance Minister Nirmala Sitharaman had said in her Budget speech on July 5 that the government would be coming up with a model tenancy law.

“It [model law] will enable creation of adequate rental housing stock for various income segments of society including migrants, formal and informal sector workers, professionals, students etc. and increase access to quality rented accommodation, enable gradual formalisation of rental housing market. It will help overhaul the legal framework vis-à-vis rental housing across the country,” the statement read.

According to the draft, a grievance redressal mechanism in the form of a Rent Authority, Rent Court and Rent Tribunal would be set up. Advance security deposit for residential properties would be capped at two months' rent and one months' rent for non-residential properties.

“After coming into force of this Act, no person shall let or take on rent any premises except by an agreement in writing. Within two months of executing the rental agreement both landowner and tenant are required to intimate to the Rent Authority about the agreement and within seven days a unique identification number will be issued by the Rent Authority to the both the parties,” the statement said.

If not covered under the tenancy agreement, a revision in rent would have to be communicated to the tenant three months in advance. The District Collector would appoint an officer of the rank of Deputy Collector and above to be the Rent Authority in the area.

Stating the the law would strengthen renting, the MoHUA statement said: “The existing rent control laws are restricting the growth of rental housing and discourage the owners from renting out their vacant houses due to fear of repossession. One of the potential measures to unlock the vacant house is to bringing transparency and accountability in the existing system of renting of premises and to balance the interests of both the property owner and tenant in a judicious manner.”


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