The Union Cabinet, chaired by Prime Minister Narendra Modi on June 2 approved the Model Tenancy Act for circulation to all States / Union Territories for adaptation by way of enacting fresh legislation or amending existing rental laws suitably.
It will help overhaul the legal framework with respect to rental housing across the country, which would help spur its overall growth.
The Model Tenancy Act aims at creating a vibrant, sustainable and inclusive rental housing market in the country. It will enable creation of adequate rental housing stock for all the income groups thereby addressing the issue of homelessness. Model Tenancy Act will enable institutionalisation of rental housing by gradually shifting it towards the formal market, a government statement said.
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 housing and urban affairs ministry had floated the draft model tenancy law in July 2019. It proposes to establish an independent authority in every state and Union Territory for registration of tenancy agreements and even a separate court to take up all tenancy-related disputes.
The draft model tenancy law has proposed limiting the advance security deposits to two months’ rent, and has also suggested heavy penalties for tenants who decide to overstay. Those who do may have to shell out double the rent for two months and even four times.
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