In 2019, the Ministry of Housing and Urban affairs (MOHUA) proposed the draft Model Tenancy Act (MTA) with the objective of regulating rental housing and striking a balance between the interests, rights and obligations of landlord and tenant.

On 2nd June 2021, the Central government approved the draft MTA for circulation to all States and Union territories. They could entirely adopt the MTA or suitably modify their existing rental laws.

Salient features:

1. Applicability
   (i) The Act will be applicable in urban and rural areas and covers residential and commercial properties.
   (ii) It will be applicable prospectively and will not affect existing tenancies.
   (iii) It shall come into force as and when notified in the Official Gazette by the State Government/Union Territory Administration.
2. Non applicability
   Certain types of housing/ premises will not be governed by the MTA:
   (i) Premises owned or promoted by the Central or State government; union territory administration or local authority; a government undertaking or enterprise; Statutory body or Cantonment Board;
   (ii) Premises owned by a company, University or Organization given on rent to its employees as part of service contract;
   (iii) Premises owned by religious or charitable institutions as may be, by a notification specified by the State government / Union territory Administration;
   (iv) Premises owned by auqaf registered under Waqf Act 1955 or by any trust registered under the public trust law of the State / Union territory for the time being in force;
   (v) Other building or category of buildings specifically exempted in public interest by notification by the State Government/Union territory Administration.
   However if any of the owner of the above categories agrees for the rent agreement to be governed by the MTA, such owner may inform the Rent authority of the same.
3. Agreement in writing
   (i) Consequent to the enactment of the Act, houses can be rented only by way of a written agreement between the landlord and the tenant. This has to be intimated jointly by landlord and tenant to the Rent authority within 2 months from date of entering into the tenancy agreement.
   (ii) Where they fail to intimate within 2 months, the landlord and tenant shall separately inform the execution of tenancy agreement to the Rent Authority within 1 month after the expiry of the 2-month period.
   (iii) The Rent authority shall upload detail of such agreement(s) on a vernacular language website created by the authority and allot a unique identification number to the parties within 7 working days from the date of receipt of such information in the specified manner.
4. Rent
   The landlord and tenant can mutually agree and fix the rent. There is no monetary ceiling.
5. Duration of tenancy
   (i) The landlord and tenant can mutually agree and fix the duration of the tenancy.
   (ii) For renewal of the agreement, the tenant should request the landlord for renewal within the period of tenancy. Renewal agreement shall be entered into by mutual agreement between parties.
   (iii) Where duration of tenancy has ended and not been renewed or tenant fails to vacate the premises, then enhanced rent as specified shall be paid to the landlord.
   (iv) The tenancy agreement executed between landlord and tenant, on their demise, shall be binding upon their successors with the same rights and obligations for the remaining period of the tenancy.
6. Security deposit / Advance
   Residential premises – maximum of 2 months’ rent Non-residential premises – maximum of 6 months’ rent
7. Sub-letting
   The tenant cannot sublet the premises unless he enters into a supplementary agreement (to the existing tenancy agreement) with the landlord. An intimation of the same has to be given jointly by the tenant and landlord to the Rent Authority within 2 months of entering into such agreement.
8. Revision of rent
   (i) Revision of rent (during the tenancy period) shall be in accordance with the terms of the tenancy agreement.
   (ii) On commencement of tenancy period, if the landlord carries out any structural improvement, alteration or addition to premises which are not in the nature of repairs as contained in the Act, the landlord can increase the rent. Such increased rent shall become effective within 1 month from the date of completion of such work.
   (iii) In the event of any dispute in the course of revision of rent, such dispute shall be determined by the Rent Authority.
9. Rights & obligations of parties
   (i) Both parties shall sign the agreement in duplicate and each party shall have an originally signed copy of the agreement.
   (ii) Both parties are obligated to keep the premises in good condition except for repairs due to normal wear and tear. Maintenance and repairs shall be undertaken by parties in accordance with the tenancy agreement and subject to the first and second schedule of the MTA or as agreed to in the tenancy agreement.
   (iii) The rent amount shall be paid by the tenant to the landlord within the time stipulated in the agreement. The landlord or property manager shall issue as acknowledgment, a duly signed receipt for the amount received. If paid electronically, the bank acknowledgement will serve as conclusive proof.
   (iv) If the landlord refuses to accept the rent and or other charges, the tenant can pay it through money order for a period of 2 months. Even after the said period, if the landlord refuses to accept the rent or there is ambiguity on whom to pay the rent to, the tenant may deposit it with the Rent authority.
   (v) During the subsistence of the tenancy, the tenant shall take care of the premises in the specified manner.
   (vi) The landlord can enter into the premises during the period of tenancy only after giving notice (in writing or electronically) at least 24 hours prior to the proposed visit. The notice must clearly specify the intention, day, time and reason of the visit. No such entry is permitted before sun rise or after sun set. Only in force majeure situations like war, flood, fire, cyclone, earthquake or any other natural calamity the landlord can enter into premises without prior notice.
   (vii) In case a property manager is appointed, the landlord must clearly communicate the same to the tenant(s) along with duties (which are enlisted) and rights of the property manager.
   (viii) The landlord or property manager shall not withhold any essential supply or service (power, gas, electricity, communication link, parking, lifts etc.) in the premises occupied by the tenant.
10. Repairs & Maintenance
    (i) Repairs & maintenance (including for common facilities shared amongst tenants) shall be carried out by parties in accordance with the Second schedule of the MTA or as agreed to in the tenancy agreement.
    (ii) If the landlord refuses to carry out repairs as per the agreement, the tenant may carry out such repairs and deduct such expenditure incurred from the rent to be paid for succeeding months. However, the deduction rom rent in any one month shall not exceed 50% of the agreed rent for a month.
    (iii) If the tenant fails or refuses to carry out repairs, the landlord may carry out the repairs and deduct such amount incurred from the security deposit. The amount so deducted shall be paid by the tenant within 1 month of issue of notice by the landlord in this regard. However, if the cost of repairs exceeds the security deposit, the tenant has to pay the excess cost including the security deposit within 1 month of issue of notice by the landlord.
11. Eviction of tenant
    (a) Tenant cannot be evicted during the tenancy agreement unless agreed to by both parties in the tenancy agreement.
    (b) However, the landlord can approach the Rent authority and file an application to evict the tenant. The Rent authority, after being satisfied, can pass an order for eviction of tenant on occurrence of events such as
    – failure by tenant to pay rent or
    – failure by tenant to arrears of rent for a period of 2 consecutive months along with interest for delayed payment within 1 month from date of service of demand notice for payment of arrears
    – subletting whole or part of the premises without prior consent of landlord
    – misuse of premises and continued misuse despite a desist notice from the landlord or
    – where it is necessary to carry out repairs or alteration work and it is not possible to do so with the tenant inhabiting the premises.
    – where the premises is required by the landlord for carrying out any repairs, construction, rebuilding etc., for change of its use as permitted by the Competent Authority.
    – when the landlord contracted to sell the premises pursuant to the tenant giving written notice for vacating the premises
    – when the tenant has carried out any structural change or erected any permanent structure in the premises without the written consent of the landlord.
    (c) On the death of the landlord, if his legal heirs have a bonafide requirement of the premises during the period of tenancy, they can apply to the Rent authority requesting for eviction and recovery of possession of the premises. The Rent Court, if satisfied, may order against the tenant for handing over vacant possession of the premises to the legal heirs of the deceased landlord.
    (d) There are other provisions relating to (a) enhancement of rent in case of refusal by the tenant to vacate the premises in accordance with the tenancy agreement (b) refund of advance rent by landlord (c ) payment of rent during eviction proceedings; (d) construction of additional structures; (e) premises comprising of vacant land; (f) notice of giving up possession by tenant etc.
12. Force Majeure
    (i) If the premises is uninhabitable without any repairs by the landlord, the tenant may abandon after giving the landlord 15 days written notice.
    (ii) In a force majeure event (war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting the habitation of the tenant), the landlord shall allow the tenant to continue in the premises till a period of 1 month from date of cessation of such force majeure event.
    (iii) If the premises become uninhabitable due to occurrence of a force majeure event, and the premises becomes uninhabitable by the tenant, the landlord shall not charge any rent until the premises is restored / made inhabitable.
    (iv) If the premises become uninhabitable due to occurrence of a force majeure event, and the landlord fails to carry out repairs to make it inhabitable or the premises cannot be made inhabitable, the landlord shall refund security deposit and advance rent, if any to the tenant within 15 days of expiry of notice of uninhabitability. The refund shall be made after deduction of liability of the tenant.
13. Grievance Redressal
    (1) Disputes / grievance shall be reported to the following authorities exclusively set up to deal with issues relating to MTA:
    (a) Rent Authority – An officer not below the rank of Deputy Collector shall be appointed Rent Authority within his jurisdiction. Any grievance of orders passed by rent authority shall be made to the Rent Court. Any order that may be made by the Rent Court shall be binding on all occupants of the premises.
    (b) Rent Court – An officer not below the rank of Additional Collector or Additional District Magistrate or office of equivalent rank shall be appointed Rent Court within his jurisdiction. Any grievance of orders passed by rent authority shall be made to the Rent Court.
    (c) Rent Tribunal – The State Government/ Union territory Administration may, in consultation with the jurisdictional High Court appoint District Judge or Additional District Judge as Rent Tribunal in each district.(2) The Rent Courts and Rent Tribunals shall not be governed by civil courts. They shall be guided by principles of natural justice and can regulate their own procedure.(3) Provisions of Code of Civil Procedure, 1908 regarding service of summons shall be applicable mutatis mutandis for service of notice by the Rent court or Rent Tribunal in the prescribed Form.

    (4) The Rent Court or Rent Tribunal shall expeditiously try to dispose of the case within 60 days from date of receipt of application or appeal. If it exceeds the said period, it shall record its reasons in writing for delay in disposal of application or appeal.

    (5) In case a party is aggrieved by an order of the Rent Court, it may prefer an appeal to the Rent Tribunal. The Act prescribes time limit ranging between 30 to 90 days within which time matters have to be heard and disposed of. Else reasons for delay have to be recorded in writing. (6) An order of a Rent Court or a Rent Tribunal shall be executed in the Rent Court in the prescribed manner.

An open door

The Model Tenancy Act is intended to regulate renting of premises, balance and protect interests of landlords and tenants and provide speedy adjudication / grievance redressal mechanism for resolution of disputes.

A 2011 census indicates that more than 1 crore houses were lying vacant in urban areas. This number would have only increased in this decade. Yet there is shortage of rental housing.  Through this Act, the government seeks to effectively utilize the vacant housing stock and address the imbalance. It seeks to make available affordable housing for students, workers and migrant labourers. MTA seems to be the Key to housing for all. 

For full text of the Act:

http://mohua.gov.in/upload/uploadfiles/files/3%20ENGLISH.pdf