The economic fallout of COVID-19

Rent control amidst pandemic

Laws mandating the registration of tenancies need to be made applicable across States

With the social and economic impacts of COVID-19 and the subsequent lockdown more discernible than before, there is a clarion call made to landlords by tenants to ‘forgive’ rent for a month or two — especially for poor migrant families, who do not have other housing options or savings. Government, civil society, academia, and migrants themselves are urging landlords to stop evictions as it would exacerbate the pandemic. It does not help matters that policymakers do not know who these landlords actually are, since the vast majority of rent arrangements in India are informal and unrecorded.

 

As of now, governments are ‘ordering’ or requesting landlords to excuse rent and stop evictions on the basis of the Disaster Management (DM) Act of 2005. This, however, is a very roundabout way, as this Act does not have any provisions for demanding continuation of rental housing arrangements. The focus has to shift away from the DM Act to rent control acts that actually aim to regulate rental housing. This is where some medium to long-term thinking on rent control laws in States, as well as the Central government’s Model Tenancy Act, 2019, could be useful.

Regardless of how it sounds, landlords have a right to evict tenants as per any agreement they may have mutually. At the same time, tenancies are not unregulated by law — all tenancies should be administered by the state’s rent control laws.

Interests of landlords & tenants

Typical rent control laws have historically favoured tenants, in extremis in fact — the logic being driven by a popular conception of landlords as petty capitalists exploiting poor, vulnerable tenants. This is only partly true. Research has shown that landlords, especially in the rental housing market in poor parts of our cities, are as poor and vulnerable as their tenants. Consumption data for poor households in urban areas indicate a uniform lack of savings or access to social and economic safety nets — for both landlords and tenants. In other words, landlords themselves, by and large, cannot afford a no-rent month.

So, we are faced with a terrible quandary — there is no legal obligation for landlords to excuse rent or not evict tenants in the current pandemic, and this is also a situation that they themselves cannot afford. This predicament is further compounded by the informality in the rental housing market — we do not even know how many people are giving out their houses on rent, for how much, how long, or under what terms and conditions.

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Consider two things: first, we have to make the rent Act applicable across more and more tenancies. This means that all tenancies, including those informal in nature, must get registered under the Act. This is the only way we will know who actually the landlords and tenants are, and where these houses are. Here, we also see the proposed MTA playing a key role in emphasising the registration of rent agreements through to-be-established rent authorities in every State. This is doable, and all States should pursue it. Tamil Nadu has already launched such an authority that manages a portal for simplified registration.

Second, the rent Acts, as well as the Model Tenancy Act, need a force majeure clause for emergencies such as the pandemic. In times of dire stress, there is a strong case for passing an order to prevent evictions. When passed under a rent law, for registered tenancies, it will carry a far stronger legal sanction than under a disaster law.

We still need to consider that landlords may not be able to afford a rent-free month — they need the rent for their own survival. For this, a mobilisation of housing, welfare and disaster funds is required to make up for this loss of rent. Funds could also be crowd-sourced, acquired from corporate social interests, and grants from international and national donor organisations. The advantage of having registered tenancies would then be evident — because the government would be able to channel funds directly into the accounts of landlords and tenants.

The writers work at the Indian Institute for Human Settlements. Views are personal

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Printable version | Jul 14, 2020 1:47:00 PM | https://www.thehindu.com/opinion/op-ed/rent-control-amidst-pandemic/article31521840.ece

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