On June 02, 2021, the Union Cabinet of Ministers approved the Model Tenancy Act (“Model Act”) prepared by the Ministry of Housing and Urban Affairs ("Ministry") for circulation to the States and Union Territories. The Model Act may be adopted by the individual States and Union Territories which would prescribe the extent to which the Model Act would override existing local legislations. This discretion as regards adoption/ enactment of the Model Act is a prerogative of the States and Union Territories because Entry 18 in List II of the Seventh Schedule of the Constitution of India 1949 states that the ‘rights in or over land’, which includes ‘land tenures such as relation of landlord and tenant and the collection of rents’, is a State subject. We understand that since the legislative scope of the Model Act extends to a State subject, the States will ultimately decide whether to introduce the Model Act in their respective legislatures.
 
Objective:

As the Ministry elaborates in its ‘Background Note on the Model Tenancy Act’, the Model Act was prepared with the objectives of balancing the interests and rights of both the landlord and tenant, creating an accountable and transparent ecosystem for renting of premises, and developing a speedy dispute resolution mechanism for adjudication of disputes between the landlord and tenant. The Ministry observes that the subsistence of archaic rent control laws and absence of a speedy dispute resolution mechanism has made the rental housing market financially unattractive, limiting it to an informal sub-standard market lacking basic amenities. The Model Act aims to address and resolve some of the impediments in establishment of an optimal rental market. If enacted by the States and Union Territories, the Model Act could entice the private sector to develop housing projects for rent purposes and go a long way in formalizing and stabilizing the rental market at large.
 
Salient Features:

a.    For the purposes of the Model Act, a “premises” would mean any building or part of a building which is, or is intended to be, let on rent for the purpose of residential or commercial use except for a hotel, lodging house, dharamshala, inn and for industrial use.
b.    The Model Act would be applicable to all premises irrespective of the area/ size of said premises.
c.    After the commencement of the Model Act, no person shall let or take on rent any premises except by an agreement in writing.
d.    The factum of tenancy shall be jointly intimated by the landlord and tenant to the rent authority within 2 (two) months of execution of the tenancy agreement. In the event of failure of joint intimation, the parties shall inform the rent authority about the tenancy separately, within  1 (one) month after expiry of the 2 (two) month period accorded for joint intimation. 
e.    The Model Act does not prescribe rent ceiling or mandatory minimum/ maximum duration for letting out a premises on rent. The rental amount and duration of tenancy shall be fixed by mutual consent between the landlord and the tenant through a written agreement.
f.    The security deposit amount shall be a maximum of two months’ rent in case of residential premises and up to six months’ rent in case of non-residential premises.
g.    The sub-letting of premises shall only be carried out by the tenant with the prior consent of the landlord, by way of a supplementary agreement. The factum of sub-letting must be intimated to the rent authority jointly by the parties within two months of execution of the sub-letting agreement.
h.    The specific roles and responsibilities of the landlord and tenant vis-à-vis repair and maintenance of premises have been enumerated under the Second Schedule to the Model Act. The landlord shall be responsible for structural repairs except those necessitated by damage caused by the tenant, whitewashing of walls and painting of doors and windows, changing and plumbing pipes when necessary and Internal and external electrical wiring and related maintenance when necessary. The tenant shall be responsible for comparatively minor repairs and maintenance works including changing of tap washers and taps, drain cleaning, water closet repairs, kitchen fixtures repairs, etc.  
i.    A tenant shall not be evicted during the continuance of tenancy agreement unless otherwise agreed to in writing by the landlord and tenant, or unless the Rent Court passes an order of eviction on an application made by the landlord. A landlord can file such an application for eviction of a tenant before Rent Court on grounds including the following:

i.    Non-payment of rent/arrears of rent and other applicable charges for a consecutive period of 2 (two) months.
ii.    Misuse of premises despite notice by landlord, where the tenant has parted with possession of the premises without consent of landlord.
iii.    Where the landlord must carry out repair or construction or rebuilding or addition or alteration or demolition in respect of the premises and the same cannot be carried out without the premises being vacated.
iv.    Where the premises is required by the landlord for carrying out any repairs, construction, rebuilding, additions, alterations or demolition, for change of its use as a consequence of change of land use by the competent authority, etc.

j.    In case of death of the landlord, where there is a bona fide requirement of the premises let out on rent by the legal heirs of the landlord during the period of tenancy, such legal heirs may file an application in this behalf for eviction and recovery of possession of the said premises before the Rent Court.
k.    If a tenant fails to vacate the premises on the expiration of the period of tenancy mentioned under the tenancy agreement or after termination of the tenancy by an order or notice under the provisions of the Model Act, the landlord would be entitled to double the monthly rent for 2 (two) months and 4 (four) times the rent thereafter till the tenant continues to occupy the said premises.
l.    During the pendency of any proceedings for eviction on any ground other than those pertaining to non- payment of rent, the landlord may seek interim relief before the Rent Court to direct the tenant to deposit the rent payable under the tenancy agreement with the court, along with all other charges due and delayed payment/ penal charges.
m.    The Act contemplates a three-tier dispute resolution process through appointment of a rent authority, rent court and rent tribunal. The appointment criteria for appointment of the said entities is specified under the Act.
n.    The Rent Authority, in addition to performing certain administrative duties enumerated under the Model Act, would act as the court of first instance for disputes pertaining to revision of rent, repair and maintenance, breach of duties of a property manager and withholding of essential supplies/ services such as water electricity, parking, etc. by the landlord.
o.    The Rent Court shall act as the court of first instance for disputes pertaining to eviction and delivery of vacant possession of a premises, permission to build additional structures, etc. In addition to this, the Rent Court shall exercise appellate jurisdiction over the Rent Authorities falling within its territorial jurisdiction.
p.    The Rent Tribunal shall exercise appellate jurisdiction over the Rent Courts falling within its territorial jurisdiction.
q.    The Rent Court and Rent Tribunal shall endeavor to dispose of a case as expeditiously as possible, not exceeding a period of sixty days from the date of receipt of the application/ appeal, failing which the Rent Court/ Rent Tribunal shall record its reasons in writing for not disposing the application/ appeal within that period.
r.    The jurisdiction of a civil court is barred in so far as it relates to the provisions of the Model Act. However, jurisdiction of the Rent Court shall be limited to the tenancy agreement submitted to it as per the requirement under the Act and shall not extend to the question of title or ownership of premises
 
Please find a copy of the approved Model Tenancy Act, here and a copy of the Background Note on the Model Tenancy Act, here.

This update has been contributed by Maneesha Kongovi (Partner) and Harsh Parekh (Associate).

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