The Model Tenancy Act- Formalizing the Rental Housing

The National Sample Survey Office (NSSO) reports of the last three years showcase approximately one third of all urban households to live in rental households. The report is indifferent of the 2011 census where vacant houses found in urban areas were declared to be in excess of 1 Crore.[1] This discrepancy, supplemented by the lack of progressive model law, is indicative of the informal rental housing existing in India. Recognizing this grey area, the government drafted Model Tenancy Act (herein after referred to as “MTA”) in 2019 to shift from informally drafted agreements to formally drafted agreement. This draft has now officially been approved by the Centre, subject to the Union Cabinet meeting chaired by the honorable Prime Minister of India- Mr. Narendra Modi, and thereof put forward for circulation among States and Union Territories. The spiral effect of the approval requires the State and the Union Territories to either amend or enact a new legislation to ensure consistency.

Considering that MTA first came into discussion in 2015 with the Pradhan Mantri Awas Yojana-Urban[2], the Centre pushes for a win-win scenario for both the parties involved, namely, the landlord and the tenant. The claim of the Centre is that MTA reduces “trust deficit”. It the belief of the government that neither the tenant nor the landlord should be on the wrong end of the bargain and get stuck in a hyper-hoop of arbitration and litigation. Thus, MTA enables rental housing through only written agreements. However, the unwillingness of the legislature to commit to a monitory ceiling leaves public opinion divided on trust principality. This is subject to MTA encouraging dependence on the negotiation skills of the parties involved. Thus, shifting the legal premise for standout argument in dispute settlements from caveat venditor[3] to caveat emptor[4].

Coming to the juristic aspects of the MTA, the tenant is required to uphold the written agreement even when the dispute is going on. This means that the tenant must pay rent to the landlord irrespective of the pendency of the dispute.[5] The rent paid during the pendency would balance out by the judge when deciding on the case. Considering that the Indian citizens are not new customers to red taping, the MTA further enables direct submission of all the relevant documents on the listed portal of the Act. This is inclusive of the formally drafted written agreement detailing the terms and conditions of tenancy. Thus, removing the intermediaries and enabling control to the rent authorities. Therefore, in cases of subletting, prior written consent is mandatory. This is because all structural changes to the formally submitted written agreement is subject to the landlord’s consent.

Further, MTA discourages arbitrary eviction and prohibits eviction altogether during the tenancy period. However, subject to the Rent Court/Tribunal[6] approval and orders, the landlord could repossess his/her property. However, this approval is subject to landlord’s ability to prove that the tenant was misusing the property as defined in the Act. Considering the situation where such approval is granted and the tenant still refuses to vacate the property, the MTA enables the landlord to double or even fourfold the monthly rent of the tenant in question. Nevertheless, this does not take away the tenant’s right to file complaint/appeal in the Rent Court/Tribunal. Further, the disposal of complaint/appeal by Rent Court/Tribunal is time bound to 60 days.[7]Thus, enabling right to exercise their right to complaint/appeal to more tenants and landlords.

In cases where “force majeure” events come to accentuate; the tenant would have legal possession of the landlord’s property for one month from the date of cessation of such disastrous event.[8] This is subject to withholding the sentiments of both the landlord and the tenants as per the terms and conditions of the agreement. Further, this provision is also subject to the fact that MTA limits the security deposit for residential premises and non-residential premises to maximum of two and six months respectively. Thus, limiting the provision in question to a specific time period ensures fairness to both the tenant and the landlord.

Considering that the MTA provisions does not apply in retrospect, the Act is said to be the one for the present and the future. The main purpose of the Act, as entailed by the government, is to formalize the rental housing sector by increasing private participation and establishing a balanced position in the real estate market.[9] Further, the Act is believed to cater to all income groups and mitigate the homelessness factor. Thus, MTA is also being termed as the roadmap to the new rental legislative overhaul.

References [1] Avishek G Dastidar, “Explained: What is the Model Tenancy Act?”, The Indian Express (2021). [2] Note: Housing for All by 2022 was a sub-set of the Yojana. The policy ensured that one fifth of the houses to be constructed by the government post 2015 would be for rental purposes only. [3] Note: Seller beware. [4] Note: Buyer beware. [5] Tribunal News Service, “Centre clears Model Tenancy Act to boost rental housing”, The Tribune (2021). [6] Note: MTA barres the Civil Courts jurisdiction. [7] Supra note at 1. [8] Id. [9] Supra note at 5.

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Aditya Vohra

A final year law student at OP Jindal Global University.

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