Cabinet approves Model Tenancy Act to promote rental housing; All you need to know
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Delhi, June 03: Prime Minister Narendra Modi led Union Cabinet on Wednesday approved the draft of the 'Model Tenancy Act' (MTA) for adoption and enactment by States and Union Territories to promote rental housing. Govt has passed the MTA to create a vibrant, sustainable, and inclusive rental housing market. Besides, the MTA will help in achieving the target of “Housing for All by 2022”.
Ministry of Housing & Urban Affairs defines the MTA as, "MTA will enable institutionalization of rental housing by gradually shifting it towards the formal market." According to the statement released by the government, Finance minister Nirmala Sitharaman had first released the draft of the action in 2019.
About the act:-
As per the central government, the act will help in creating adequate rental housing stock for all income groups and address the issue of homelessness. It will enable the institutionalization of rental housing by shifting it towards the formal market.
The MTA further seeks to facilitate the unlocking of vacant houses for rental housing purposes and give a fillip to private participation in rental housing as a business model. This will help in addressing the huge housing shortage.
Moreover, the tenants will have to submit a security deposit of a maximum of two months' rent, for residential premises. However, in the case of commercial property, tenants will have to submit a security deposit of six months' rent to the landlord.
The Act mandates written agreements for all new tenancies. This agreement is to be submitted to Rent Authority. The rent and duration of the tenancy are to be fixed by mutual consent between the owner and tenant.
According to the Act, if the tenant fails to vacate the premises let out on rent following the tenancy agreement, he or she will be liable to pay the landlord twice the monthly rent for the first two months and then four times till the latter continues to occupy the said premises.
The MTA also states that a landowner cannot enter the rented premises without 24-hour prior notice to carry out repairs or replacements. It should be noted that MTA will be applicable prospectively and will not affect existing tenancies.