What is the Model Tenancy Act?

In the making since 2015, the Model Tenancy Act (MTA) was approved by the Union Cabinet last year in June. Almost all the states have now adopted this Act, which proposes to streamline the process of renting property.

According to the new norms, the landlord and tenant will have to sign a written agreement specifying the rent, period of tenancy and other related terms. So, all the tenancy agreements will now be in writing.  

It proposes a three-tier quasi-judicial dispute adjudication mechanism. And no civil court will have jurisdiction over the matters. The Act also says that all the rent agreements will have to be registered with the Rent Authority.

According to an estimate by the Ministry of Housing and Urban Affairs, around 11 million houses are lying vacant in urban areas as landlords are unwilling to let these properties due to the lack of protective measures in the current tenancy and rent control laws. 

The Economic Survey 2018 had blamed “unclear property rights, weak contract enforcement and low rental yields” for this structural problem. 

Owners of residential properties are reluctant to rent out their houses because they fear tenants would refuse to vacate their property when the time comes, and may not agree to changes in the rent amount as well.  

In the event that a tenant refuses to vacate the house, the landlord can claim double the monthly rent for two months, and four times the monthly rent thereafter.

On the other hand, the Act safeguards tenants by mandating that the landlord must give three months’ notice before increasing the rent, unless otherwise specified in the rent agreement. Security deposit for residential properties will be capped at two months’ rent. 

States will have to set up a grievance redressal mechanism comprising Rent Authority, Rent Court and Rent Tribunal to provide fast-track resolution of disputes.

Disposal of a complaint/appeal by the Rent Court and the Rent Tribunal will be mandatory within 60 days. All rent agreements have to be submitted to the Rent Authority. A digital platform will be set up in the local vernacular language or the language of the State/Union Territory for submitting tenancy agreement and other documents. And No civil court will have jurisdiction over matters pertaining to provisions under the Act.

The Model Tenancy Act also states that the security deposit must be handed back to the rentee on the day the possession of the property is handed back to them. 

In case of disputes, the landlord is forbidden from cutting off essential supplies (like water and electricity).  He is also restricted from entering the property during the active rental period without giving prior notice. The Model Tenancy Act may sound good in letter.

However, a lot will depend on the Act’s implementation by various states and Union territories.  Since land and tenancy are state subjects, and since the Act suggests all states to set up dedicated courts and resolution authorities, the experience in each state could differ vastly. 

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