Model Tenancy Act of 2020- Need & Benefits for Landlords & Tenants

Over a larger period of time, the rental market in India has been fragmented and underdeveloped. This lack of a concrete solution put a lot of external pressure on the overall Indian Real Estate sector. While the leasing and renting of residential projects still fall under the purview of the Rental Control Act, the lack of all-inclusive legislation, the landlord-tenant relationship is often marred with turmoil. This is where the Model Tenancy Act needed an entry.

Need for The Act

It has been found in the National Census that the existence of vacant houses comprises 12 % of the total urban housing stock shares. What proves to be as wastage, is that there are unoccupied homes and rising demand for rentals. This wastage is a result of factors such as:

  • Hardly, any workable and all-inclusive rental policy
  • Truncated rental yield accumulated from the residential properties. These average up to no more than 3% in all major cities.
  • In the areas which are located in the suburbs, the demand seems to below. This is majorly due to a lack of connectivity and infrastructure.

Benefits of the Law on Landlords

  • Under this policy, the eviction procedures are eased out. The new policy states that the tenants would be liable to pay double of the usual rent to the landlords at a rate which is twice and/or four times of it if the tenants overstay, post-expiry of the rental agreement.
  • According to this new law, the tenants are not allowed to sub-let any part of the rented property without the permission of the landlord.

Benefits of the Law on Tenants

  • A commonly visible fact is that since the property is owned by the landlord; he/she may intrude or barge into the property which could hamper the privacy of the tenants. The Model Tenancy Act prevents this unwanted intrusion. In fact, according to the Law, the landlord must let the tenants know about his visit 24 hours prior to doing the same. The Law also states that the landlord cannot visit the tenants post-8PM in the evening and prior to 7 AM in the morning.
  • In cities like Bengaluru and Mumbai, landlords would often ask for a year’s rent to be deposited as security. However, the Model Tenancy Act has enforced a norm that the landlords can only charge a tenant, 2 months’ rent as security.
  • During the entire period of the rental agreement, the landlords might end up increasing the rent amount without prior notice. This has been regulated under The Model Tenancy Act. The Law states that the landlord would have to pre-inform the tenant 3 months prior to increasing the rent amount.
  • The Law ensures that both parties, the tenants, and the landlord, are meant to be responsible for maintaining the physical wellbeing of the rented property. However, in case you require structural maintenance will depend on the landlord.

Wealth Clinic possesses an experienced team of real estate consultants to help you find great ways to get the best of the Model Tenancy Act. For more information about our services, contact us.

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