The Model Tenancy Act addresses factors like the need to have a formal rent agreement, how much security deposit should be paid, rate of rent increase, among others
The security deposits for residential premises will be two months rent and for commercial it will be six months rent
The central government on Wednesday approved the Model Tenancy Act (MTA) for circulation to all States and Union Territories for adoption.
Under this Act, the rent authority, rent court and rent tribunal would fast track resolution of disputes within 60 days, Hardeep Singh Puri, Union Minister for Housing & Urban Affairs said.
Besides, the security deposits for residential premises will be two months rent and for commercial it will be six months rent, the minister added
According to the government, the Act will facilitate the unlocking of vacant houses for rental housing purposes.
Moreover, the Model Tenancy Act would also help in overhauling the legal framework with respect to rental housing across the country, the Centre said in a statement.
The government said the Act would facilitate the creation of adequate rental housing stock for all the income groups thereby addressing the issue of homelessness.
"Model Tenancy Act will enable institutionalisation of rental housing by gradually shifting it towards the formal market," the Ministry of Housing & Urban Affairs said.
It is expected to give a fillip to private participation in rental housing as a business model for addressing the huge housing shortage, it added.
"Model Tenancy Act provides model for urban and rural properties and template for residential & commercial properties. Will apply to future transactions and take people from informal to specific contract arrangement between landlord and tenant," Puri added.
The Centre had proposed a “model tenancy law" in 2019 under which the landowner would give a notice in writing three months before revising rent.
Moreover, security deposit to be paid by the tenant in advance will be a maximum of two months’ rent, as per the Act
According to the MTA Act, a landowner cannot cut power and water supply in case of a dispute with the tenant.
It also stated that a landowner cannot enter the rented premises without 24-hour prior notice to carry out repairs or replacement.
States, which will be free to adopt the law owing to land being state subject, will be required to constitute rent courts and rent tribunal, it stated.