Union Cabinet Approves Model Tenancy Act; Promotes Rental Housing in India

The government has cleared the Model Tenancy Act (MTA), an initiative towards institutionalising rental housing in India. The Union Cabinet has approved MTA and has declared that all states and UTs must adopt and enact MTA to promote rental housing in India.

The act has been publicised when the country is facing a shortage of proper rental facilities. The situation is especially so for the lower-income groups and migrant workers. On the other hand, about 1 crore flats are lying vacant in the urban areas.

The Ministry of Housing and Urban Affairs (MoHUA) states that making the 1.1 crore vacant houses available on rent will complement the ‘Housing for All by 2022’ vision. 

The last year’s report from Primus Partners and Guesture Co-living stated that India’s residential rental market had crossed Rs.1.45 lakh crore (IMF), and 68% of it is in urban areas. The share of rental housing, when compared to all housing, is around 11.1%. It was pointed out that more than two-thirds of the urban rental housing market is unorganised.

All this while, leasing and renting residential properties had to comply with the Rent Control Act, where each state had its own version of the act. Now, MTA may act as a bridge of trust between tenants and landlords, eventually bringing more vacant houses under the spotlight across the country.

The MTA is also capable of delineating obligations, ensuring speedy conflict resolutions and dispute redressal. The act proposes establishing a separate Rent Court and Rent Tribunal in every state and UT to resolve matters related to rental housing. It caps the security deposit to two months of rent making it a lot lighter on the tenants’ pocket.

Further, the act safeguards the tenants’ interest against landlords disconnecting power and water lines in disputes. In addition, landlords must provide 24-hour prior notice to carry out any repair work. 

The Model Tenancy Act seems to provide much-needed relief to tenants while preserving the rights of landlords.

For any clarifications/feedback on the topic, please contact the writer at apoorva.n@cleartax.in

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