In her recent budget speech, Finance Minister Nirmala Sitharaman announced the creation of a model tenancy act that would streamline renting laws around the country. The draft of the Act has been created by the Ministry of Housing and Urban Affairs and is in circulation now. States and Union Territories must provide their feedback on the draft by July 26. Meanwhile, here’s a quick look at the salient features of the Act.
The Act Is Not Retrospective
Current rental agreements will not be in the ambit of the Act. Only new agreements will be enforced under the Act.
Cap On Security Deposit
Landlords demand a security deposit from renters. This may range from 2-3 months in places like New Delhi to 10-12 months in places like Mumbai and Bangalore. The Act aims to cap the deposit at two times the monthly rent for residential properties and one month for non-residential ones.
Penalties For Late Vacation
Once the landlord has served notice to the tenant to vacate the flat, the tenant will be penalized for failing to vacate as per the agreed timeline. The penalty will be two times the rent for the first two months and four times the rent thereafter.
Intimation Of Rental Authority
No tenancy can be without a written rental agreement, which must be registered and informed to the Rental Authority within two months of the execution of the agreement. The Rental Authority will within 7 days assign a unique identification number to the agreement.
The landlord can’t hike the rent during the agreement. The rent must be revised only after a notice of three months. The tenant can either accept the revision or provide notice for termination. If the tenant doesn’t respond to the notice, he is deemed to have accepted the rent hike.
No Subletting Without Permission
Tenants will not be able to directly or indirectly sublet or assign, whole (or part) of the property for a rent higher than the rent (or the proportionate rent) charged by the landowner. Subletting cannot be done without the express consent of the landlord. The tenant must provide the landlord all details of the sub-tenant along with the dates of commencement or termination of the sub-tenancy, and pay all related charges.
No Withholding Utilities
No landlord can withhold essential supplies and services to the tenant. The Act describes these essentials as water, electricity, piped gas, lights in common areas such as lifts and staircases, parking, sanitary services etc.
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