The Union Cabinet approved the Model Tenancy Act to bolster the relationship between homeowners and tenants. Here we explain about benefits of the Model Tenancy Act (MTA2021)
It will facilitate tenants to find a house easily as it encourages private participation and makes available unrented houses in the real estate market. The present act will strengthen the rental real estate market and regulates the various rental terms and conditions.
How does it benefit Tenants?
- Regulates high amount charged as security deposit: Till recently, the tenants in Bangalore, Chennai, and Mumbai had to pay a hefty amount as a security deposit to rent a house. Sometimes, the homeowners demanded 8 to 10 months’ rent in advance. The present Act has a clause that regulates the homeowners not to charge more than 2 months’ rent as a security deposit. It also makes it compulsory for the homeowners to return the security deposit within one month once the tenant vacates the homestead.
- More homesteads available for rent: Estimation revealed that almost 1 crore houses were lying idle during the year 2011. The number would have gone up by 2021. By allowing private participation in the rental market, the tenants will no longer find it challenging to find a home for rent. Since there is equilibrium in the demand and supply for homesteads, the rent will reduce considerably. The professionals, who had to find a home in far-flung places, can now get a home near their workplace.
- Maintenance work-responsibility of owner: As per the new law, the owner should undertake the responsibility of repair and maintenance work. Furthermore, the homeowner has to give 1 days’ notice to enter the premises of the tenant.
- Fast rent dispute settlements: Till recently, civil courts dealt with the rent cases, which saw an unjust delay in the pronunciation of judgments. The new Model Tenancy Act necessitates the establishment of a three-tier redressal system. This three Tyre redressal system consists of rent court, rental tribunals, and rental authorities to carry out the law. This system benefits the tenants but also the civil courts, previously burdened by substantial cases.
- Control terms regarding illegal eviction by homeowners: Previously Delhi rent control Act and Maharashtra rent control act gave enormous power to the homeowners to evict the tenants according to their terms. Many cases filed in the civil courts condemned the unjust provisions in these states’ rent control act. The new Model Tenancy Act has laid down terms and conditions based on which the homeowners can evict their tenants.
- Regulation regarding the role of property managers: According to the new law, the property managers acting on behalf of the homeowners have to register with the rental authorities. They have to provide their PAN number, Aadhar number, address, and contact details to these authorities. Tenants can protect themselves from dealing with fraud brokers who loot them.
- A homeowner can evict an overstaying tenant: When the tenancy period has expired, and the tenant overstays in the rental premises, he is liable to pay twice the amount of rent up to 2 months of the period of overstay. After two months, the tenant has to pay four times the rent for further overstays. These provisions will be applicable only if the landlord has issued a notice of eviction due to the expiry of the contract. Otherwise, the contract is presumed as automatically extended for the period of another six months.
Along with these multiple benefits of the model tenancy act, there are some limitations too:
- Law not applicable to all kinds of premises: The act keeps at bay the premises under the control of central, state government, union territories as well as owned by religious and charitable institutions. There is no clear provision regarding the control of these premises.
- Definition of “Premise” is vague: The definition of the word Premise is vague. This act defines a premise as a building or a part of a building rented out for residential purposes. The definition does not include hotel, industrial property. When the definition is unclear, it creates ambiguity regarding the provision of this act to certain premises, which poses difficulty to homeowners and tenants.
- Repossession provisions still unclear: The law laid down that the homeowners can evict the tenants only under certain conditions. It also says that a landlord can evict the tenant if the rent court permits such an eviction. These provisions will benefit the landlords if a workable recourse is available. The landlords will not reap the benefits of the act if legal recourse is absent.