Draft Model Tenancy Act, 2019

This Act is proposed to overcome the archaic nature of current rental laws in the country as they do not address the relationship between the lessor and lessee realistically and practically.

The important features of the Act are as following –

• The definition of ‘premises’ includes residential and commercial premises but excludes premises earmarked for industrial use.
• Under the Proposed Model Act, the renting-out of the premises has to be under an agreement in writing and filed with the Rent Authority by the landowner and tenant. This filing shall be taken as evidence for matters relating to the tenancy.
• In the event that the tenant fails to vacate the premises once the lease has expired, the tenancy will revert to a month-to-month tenancy for a period of six months. After this period, the tenant is liable to pay twice the rent for two months and four times the monthly rent thereafter, till the time they vacate the premises.
• For residential premises there is a cap of two months’ rent that can be charged as security deposit. For non-residential premises, there is no cap but instead there is a minimum of one month’s rent which would need to be charged as security deposit.
• The landlord is not permitted to increase the rent during the tenancy period, unless the amount or the method to calculate the proposed increase is stated in the tenancy agreement. The concept of a `property manager’ has now been included in the Proposed Model Act’ and obligations and responsibilities of the property manager have been elaborated.
• The Proposed Model Act has also introduced the mechanism of addressing the disputes and grievances through a specific Rent Authority, Rent Court and Rent Tribunal.
• The States/Union Territories may make rules to carry out provisions of the Proposed Model Act and the existing Rent Control Act applicable to States/Union Territories would stand repealed from the date of notification of Proposed Model Act.

Positives of the Act

In the present shape and form, Positives of the act –

• Speedy disposal of cases with establishment of Rent Authority, Rent Court and Rent Tribunal.
• The Act ensures that whims and fancies of both tenants and owners are kept in check with provisions like proposed neutral authority, limiting deposit amount etc.

Negatives of the Act

• Since it is only a Model Act, it can only advice states but can’t direct them. Many states have their own leasing/tenancy acts like Maharashtra which has provisions contradicting the Model Act.
• Setting limits on deposit amount might not go well with landowners as deposits are meant as a cushion to consider property damage and limit might not help to properly quote/asses property valuation.
• Overall, the Act is still in its consideration stage.