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- Landlords Will Not Be Able To Collect Advance Rent For More Than Two Months; Center Approves Model Tenancy Act
It will help in bringing about a radical change in the existing system of giving houses on rent across the country.
The Union Cabinet has approved the Model Tenancy Act i.e. Model Tenancy Act in the country. The law provides for the interests of both the landlord and the tenant. There is also a proposal to set up an authority or a separate court to settle disputes related to these.
According to the proposal of the new law, the landlord will not be able to take more than 2 months advance rent from the tenant. On the other hand, if the rent is not received or the tenant does not vacate the house, then the landlord will be able to collect 2 to 4 times the rent. According to the government, this will help in overhauling the existing system of giving houses on rent across the country and the rental business will pick up.
The cabinet has approved this law in a meeting chaired by Prime Minister Narendra Modi. It will be sent to all the states and union territories. Accordingly, they will be able to change or amend their tenancy law. The government had first released the draft of this act in 2019. It aims to clarify accountability between tenants and property owners and bridge the trust deficit between the two.
The share of private individuals or companies in rental housing will increase
- After the new law comes into force, they will become part of the house or property market, which was closed for a long time. This will motivate most people to rent out their vacant houses, as a provision has been made in the new law to resolve disputes related to it.
- A large number of organized players of the private sector will come forward in the business of giving houses on rent and the shortage of houses will be overcome. The new law will give the right to let these properties out. This will increase the share of private individuals or companies in rental housing.
- The states can make changes in this law according to their own. They will also constitute Rent Courts or Rent Tribunals to settle rent related disputes.
Major provision: For repairs, the tenant will have to give 24 hours notice, if the rent is not paid, then 4 times the rent
- The government says the Model Tenancy Act aims to create a vibrant, sustainable and inclusive rental housing market in the country. This will help in making vacant houses available for rent and will help in creating adequate rental housing stock for all income groups. This will also tackle the issue of homelessness.
- An important provision has been made regarding the advance amount or security amount, the biggest root of the dispute between the landlord and the tenant. In this, a maximum limit of 2 months in case of residential premises and 6 months in case of non-residential premises has been fixed. Right now it varies from city to city, like 2-3 times the monthly rent in Delhi, up to 6 times the monthly rent in Mumbai and Bangalore.
- Necessary provision has also been made to vacate the premises. If the property owner fulfills the terms of the rent agreement, he will have more rights. If the tenant does not vacate the house by the due date despite the notice, the owner will be able to charge double the rent for the first two months and 4 times the rent thereafter.
- If the property owner wants to get repairs or other work done, then 24 hours notice has to be given.
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