Model Tenancy Law: Its Essential Features

Model act, a framework for the states

The Government of India has framed a Model Tenancy Act on 2nd June, 2021, though land is a state subject.

It would serve as a model for the states when enacting fresh legislation or amending existing rental laws. The purpose of the model act is to create a vibrant, sustainable and inclusive rental housing market in the country.

The model law will now be circulated to states, for them to make tenancy laws in line with the central version or amend existing laws to make it compliant to the model tenancy law.

The model law has put in place several measures, by way of tightening regulations and making it lucrative for landowners and tenants, to boost rental housing.

Rent Authority need to be established

The Model Tenancy Act seeks to establish Rent Authority to regulate renting of premises, protect the interests of landowners and tenants and provide speedy adjudication mechanism for resolution of disputes.

States must set up Rent Authority. A Deputy Collector, appointed by the District Collector with government permission, will be the Rent Authority. The authority would set up a website, to maintain all the data it receives in the form of rent agreements.

If the owner and tenant agree to enter into a tenancy agreement and they want them to be regulated under the provisions of this law, they have to inform the Rent Authority of the agreement.

What the Rent Authorities must do?

The Rent Authority has to put in place a website in the local language or the language of the State/Union territory for submissions of document by landowner and tenant. The Authority has to provide a unique identification number to the parties and upload details of the tenancy agreement so received on its website within seven working days.

Matters Rent Authority deals with: In all matters relating to tenancy agreement, revision of rent, fixing of revised rent, depositing rent with rent authority, repair and maintenance of property and cutting of essential supplies & services, the parties in tenancy can approach the Rent Authority for an order.

That means in case of any dispute, the Rent Authority can determine the revised rent, other charges and the date from which such revised rent becomes payable. The tenant can deposit the rent with the Rent Authority if he is unable to decide to whom the rent is payable. No person including landowner can withhold any essential supply or service in the premises occupied by the tenant, which in case of any failure can be restored by the Rent Authority.

Appeal to Rent Court: Any person aggrieved by the order of the Rent Authority can prefer an appeal to the Rent Court in the jurisdiction. Civil courts would have no jurisdiction over disputes pertaining to rent matters henceforth.

Advance deposit

The security deposit to be paid by the tenant in advance shall be as determined by the agreement and as agreed mutually between the Landowner.

But it should not exceed a maximum of two months’ rent in case of residential property and, minimum of one month’s rent in case of non-residential property.Enhanced rent for not vacating

The tenant will have to pay enhanced rent if he refuses to vacate after tenancy period expires. The security deposit limited to two month’s rent in case of residential tenancy.

The information about tenancy agreement given to Rent Authority will be considered conclusive proof of the tenancy.

Who all includes as part of the term landowner?

The landowner means a person who receives or is entitled to receive, the rent of any premises, on his own account, if the premises were let to a tenant.

The term landowner includes his successor-in-interest and a trustee or guardian or receiver receiving rent for any premises or is entitled to so receive, on account of or on behalf of or for the benefit of any other person such as a minor, or person of unsound mind who cannot enter into a contract.

Who all come under Tenant

The term tenant is defined as a person by whom or on whose account or on behalf of whom, the rent of any premises is payable to the landowner under a tenancy agreement.

This includes any person occupying the premises as a sub-tenant and also, any person continuing in possession after the termination of his tenancy..

Rental agreement essential

No person shall let or take on rent any premises without an agreement in writing. Such an agreement shall be informed to the Rent Authority by the landowner and tenant jointly, in the form specified in the First Schedule within two months from the date of agreement.

The information provided shall be conclusive proof of the facts relating to tenancy and matters connected therewith. In the absence of any statement of information, the landowner and the tenant shall not be entitled to any relief under the provisions of this Act.

Renewal of rent agreement

The tenant can approach the landowner for renewal or extension of the tenancy, within the period agreed to in the tenancy agreement, before the end of tenancy period.

If the landowner agrees, the tenant can enter into a new agreement with the landowner on mutually agreed terms and conditions.

Agreement to be extended in advance

Every tenancy shall be valid for a period agreed upon between the landowner and the tenant and as tenancy agreement specifies.

The tenant may request the landowner for renewal or extension of the tenancy, within the period agreed to in the tenancy agreement. If agreeable to the landowner, they may enter into a new tenancy agreement on agreed terms and conditions.

Penal payment for overstaying

If a tenancy ends without renewal and the premises have not been vacated by the tenant at the end of such tenancy, the tenancy shall be deemed to be renewed on a month-to-month basis on the same terms and conditions as were in the expired tenancy agreement, for a maximum period of six months:

In that case a landowner is entitled to get compensation of double of the monthly rent for two months and four times of the monthly rent thereafter, for the occupation of the premise by the tenant who does not vacate the premises as per the agreement.

Deposits not to exceed two month’s rent

The security deposit to be paid by the tenant in advance shall not exceed two month’s rent, in case of residential premises; and not to exceed six month’s rent, in case of non-residential premises.

Both have responsibility to maintain premises

The responsibility to maintain the premises lie with both the parties. The rent agreement will have to specifically mention who takes care of what, in case of damages. The law lists out the responsibilities of the landowner and periodic repairs to be done by the tenant in its Second Schedule.

If the responsibility lies with the landowner and he refuses to do the needful, the tenant can deduct the money he spent on the same in the monthly rent. In the reverse, the landowner can deduct the amount from the security deposit. In case the amount is larger than the deposit, the tenant will be liable to pay the balance.

Both parties are responsible for maintaining the physical health of the rented property. The responsibility of structural maintenance will lie on the landowner.

Landowner cannot make midterm hike of rent

During the rent agreement period, landowners cannot hike the rent, unless something giving them the right to do has been clearly mentioned in the rental agreement.

The landowner will have to give three month notice to the tenant, before increasing the rent.

To stop intrusion of the landowner

The landowner needs to give a written notice of 24 hours in advance, to visit the premises. He cannot make a visit before 7 am and after 8 pm.

The landowner can visit the premises to carry out repairs, inspect the building to know whether it is in a habitable nature and for other reasons specified in the rent agreement, alone.

Rent Courts and Tribunals

The act provides for constitution of Rent Courts and Rent Tribunals. Both are civil courts but with limited powers and separate procedures. Court fee will be applicable to any application to the Rent Authority, Rent Court and Rent Tribunal.

In case of any tenancy dispute, the contracting parties would first have to approach the Rent Authority for a solution.

Rent Court: In case the disputing parties are not satisfied with the order of the Rent Authority, they could approach the rent court to seek relief with an appeal. The Rent Court will have two judges – one from the state’s higher judiciary and another from the state subordinate judiciary. The Rent Court has all the powers of a civil court in execution of its orders. It has the powers of a Magistrate for recovery of fine. It can execute the order by delivery of possession, attachment of bank accounts and appointing an advocate/court staff/local government official for execution of its order, as well.

Rent Tribunal: If the party is still aggrieved he can approach the Rent Tribunal with an appeal. Rent tribunal can decide matters in dispute based on rent related laws like Transfer of Property Act, Contract Act etc, as a civil court does. The tribunal will have three members – one Principal Appellate Member and two more members. The Principal appellate Member will be a retired High Court Judge and the other members would be from state higher judiciary.

The Rent Court or the Rent Tribunal shall endeavor to dispose of the case as expeditiously as possible but within sixty days from the date of receipt of the application or appeal.

Grounds for eviction

A landowner can evict a tenant by filing an application before the Rent Court on the following grounds:

  1. Non Payment of Rent: The tenant does not pay the rent payable under section 8;
  2. Non Payment of Rent Arrears: The tenant has not paid the arrears of rent and other charges payable in full as specified in sub-section (1) of section 13 for two consecutive months.
  3. Parted with possession: The tenant has parted with the possession of whole or any part of the premises without obtaining the written consent of the landowner;
  4. Misuse of Premises: The tenant has continued to misuse the premises even after receipt of notice from the landowner asking him to keep away from such misuse.
  5. Repair, Reconstruction etc: In case eviction of the tenant is absolutely essential for the landowner to carry out any repair or construction or rebuilding or addition or alteration or demolition in respect of the premises or any part thereof.
  6. Consequence of change of land use by the competent authority: If the premises or any part thereof is required by the landowner for carrying out any repairs, construction, rebuilding, additions, alterations or demolition, due to the change of its use pattern as a consequence of change of land use plan of the competent authority.
  7. Tenant not vacating even after giving written notice: The tenant does not vacate the house after giving written notice to vacate the premises in a way his interests would seriously suffer if he is not given the possession of that premises back.
  8. Structural alterations: The tenant has carried out any structural change or erected any permanent structure in the rented premises without the written consent of the landowner.

Rent law cannot be applied to some buildings

The Act provides that it does not apply to the government premises, university premises, premises owned by religious and charitable organizations specified by notification, waqf buildings and other building specifically exempted in public interest by notification.

Additional reading

  1. The model tenancy act 2020: