What is Model Tenancy Act (MTA) 2021 OR New Tenancy Act 2021 India
Model Tenancy Act 2021, The government-approved draft that was proposed in 2019, On 2 June, the Union cabinet approved the Model Tenancy Act (MTA), 2021, which safeguards a level playing field for landlords and tenants. The Model Tenancy Act (also known as the draft Tenancy act), was introduced by the government to protect the interests of both landlords and tenants. The same was initially discussed by the Finance Minister during the Budget 2019-20 meeting. This Act promises to facilitate easier landlord-tenant relationships.
The rental market has so far been subject to primitive laws that prevented the flourishing of a quality rental market owing to the lack of clarity and stability in the system which discouraged owners from renting out their houses. First drafted in 2019, the Model Tenancy Act is intended to aid the rental estate market and overhaul the legal framework around it. The Act seeks to bring vacant properties to market, counter procedural bottlenecks in registration, increase rental income, and provide housing for fast urbanising India.
The central and state governments have exclusive powers to implement specific regulations, where both need to work together to implement regulations. The MTA will replace the existing Rent Control Act of states, if adopted by the state in question.
Once the property owner and tenant sign the leave and license agreement, they will need to inform the rent authority within two months. The proposed authority will issue a unique identification number. In case of disputes, the authority will take a decision based on the facts that were submitted.
In the Model Tenancy Act, the resolutions are time-bound; an order must be passed within 60 days, which should give confidence to landlords to let out their properties like discourage overstay of tenants, make eviction of tenants easy, stop sub-letting by tenants.
The Act caps the security deposit to a maximum of two months’ rent for residential properties and a minimum of six months’ rent for non-residential ones. Landlords could feel that an adequate security deposit is their only leverage. But there are other provisions in the Model Tenancy Act that give more power to landlords. The Act covers only new agreements. Some feel that it should have brought in its scope agreements that property owners and tenants have already executed as it would have helped to boost confidence.
Model Tenancy Law that could help tenants like stop intrusion of the landlord, cap security deposit demanded by landlords, regulate increase in rentals by landlords, landlord responsible for structural maintenance of rented premises, means the physical health of the rented property, the responsibility of structural maintenance will lie on the landlord.
The end of verbal agreements, the agreement will detail the duration of the tenancy, acceptable practices, the rent amount, etc., and submitted to the district ‘Rent Authority.
Easier grievance redressal process, A district-level judge will oversee dispute resolution. In case a dispute arises, the aggrieved party will first approach Rent Authority.
The biggest fear any landlord had was that tenant may squat on the property, But, with a clear timeline of 60 days for solving any dispute, the law gives a lot of confidence to the landlords.
Clear differentiation of responsibilities, the biggest area of dispute used to be around the maintenance and arbitrary charges taken by landlord from the security deposit. The new Act has balanced the scales through clear delineation of landlord and tenant responsibilities. Unless agreed otherwise in the written agreement, the landlord and tenant will take charge as written in the agreement.
It is the solution to a problem too long in the rental housing, the MTA law aimed to rejuvenate of India’s rental real estate growth of investment in the sector and give a boost to entrepreneurial opportunities and innovative mechanisms of sharing of space.