After the draft was published in 2019, the Union Cabinet officially endorsed the Model Tenancy Act (MTA) on Wednesday. This new framework aims to streamline the rental processes within India, positively impacting the nation’s rental economy in the real estate sector. The government asserts that this law will reform the entire legal framework surrounding rental housing, leading to an overall economic enhancement. ## What is the purpose of this law? Government data from the 2011 census demonstrates that over 1 crore houses remain unoccupied in urban regions. Existing rent control legislation has hindered the growth of the rental housing market, leading many homeowners to shy away from leasing their properties due to fears of repossession. By fostering transparency and accountability in the rental process, the Act seeks to unlock vacant homes while safeguarding the interests of both homeowners and tenants. The Model Tenancy Act 2021 aims to establish a sustainable, dynamic, and economically viable rental housing market. It intends to formalize rental housing, making it progressively more integrated into the formal market, catering to the needs of both property owners and tenants. Additionally, the law encourages landlords to lease homes that have been vacant for extended periods. ## How does the Modern Tenancy Act benefit tenants? - Capped Security Deposits: Tenants previously had to provide one year’s rent as a security deposit in cities like Bangalore and Mumbai. With the new Act, landlords can only request a deposit of up to two months’ rent. - Limit on Rent Increases: Homeowners are not permitted to raise rent during the duration of the lease agreement without providing three months' notice. - Protection Against Invasive Landlords: Tenants often face issues with homeowners entering their properties unannounced. The new rules stipulate that landlords must give a written notice 24 hours in advance before visiting and cannot visit between the hours of 8 p.m. and 7 a.m. Moreover, in case of tenant-landlord disputes, landlords cannot cut off essential services like water and electricity. - Maintenance Responsibilities: While both parties share maintenance responsibilities, the structural maintenance falls to the owner, who must also provide a 24-hour notice prior to any repairs or replacements. ## How does the Modern Tenancy Act assist landlords? - Addressing Tenant Overstays: Tenants who fail to adhere to the terms of the lease, such as overstaying or delayed payments, will incur hefty penalties. A tenant who stays beyond the agreed period must compensate the owner with double rent for two months, potentially escalating to four times in certain circumstances. - Restricting Subletting: Tenants cannot sublet any part of the property without obtaining the owner’s explicit consent. - Streamlined Eviction Process: Under the Model Tenancy Act 2021, landlords can pursue eviction remedies in rent courts if tenants fail to pay rent for two consecutive months. ## Expert Opinions on the Model Tenancy Act 2021: ### Enhancing Housing Quality Ramesh Nair, former CEO of JLL India, states that achieving housing for all relies on a robust rental housing model. The Model Tenancy Act aims not only to reduce slum areas but also to significantly enhance housing quality, shifting the focus away from exclusive home ownership. ### Fostering a Better Tenancy Market Rohit Poddar, Managing Director of Poddar Housing and Development, indicates that the Act will regulate and encourage rental housing, which is crucial for addressing population growth. By clarifying rental terms for both parties, it aims to minimize disputes resulting from informal agreements, benefiting both tenants and landlords alike. ### Encouraging Investor Participation Shishir Baijal, Managing Director and Chairman of Knight Frank India, observes that regulatory frameworks like GST, REIT, RERA, and now tenancy laws are pivotal in transforming the real estate landscape into a more transparent and customer-friendly sector, encouraging both local and international investor participation. This law establishes clear rights and responsibilities for both homeowners and tenants. Experts express optimism that this legislation marks a significant progression during the challenging pandemic period. ### Building Trust Between Tenants and Landlords Manju Yagnik, Vice-Chairperson and Sr. VP at NAREDCO, believes that the Model Rental Act will definitely foster trust between homeowners and tenants, creating a clearer rental market. With distinct regulations governing leasing and tenancy, disputes can be resolved more expediently. In the short term, this law is anticipated to increase rental housing supply, benefiting those relocating to urban areas for work. ### Facilitating New Rental Housing Niranhan Hiranandani, National President of NAREDCO, asserts that the new legislation will simplify life for tenants, landlords, and investors alike. The Model Tenancy Act 2021 will reform the legal framework for rental housing and stimulate overall growth. It aims to alleviate the problem of vacant rental properties, providing much-needed impetus for private sector participation in the rental housing market. Ultimately, this law plans to create a new rental housing framework to address the needs of all demographics in the housing market. Also read:- Greater Noida development body starts new industrial plot scheme Best Area to buy Flat in Pune [Chandigarh Housing board set up help desk for property auction](http://info.propertywala.com/real-estate-news/chandigarh-housing-board-set-up-help-desk-for-property-auction/