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Model Tenancy Act

  • Category
    Polity & Governance
  • Published
    14th Jun, 2021

Central government has recently approved the Model Tenancy Act (MTA) to streamline the process of renting property in India.

Context

Central government has recently approved the Model Tenancy Act (MTA) to streamline the process of renting property in India.

About

Key features of the Act

  • Unlocking of vacant house:The Act will facilitate unlocking of vacant houses for rental housing purposes.
  • Balancing the rights of both landlords and tenants: It is aimed at bridging the trust deficit between tenants and landlords by clearly delineating their obligations.
    • Monetary ceiling:There is no monetary ceiling under MTA, which enables parties to negotiate and execute the agreement on mutually agreed terms. It will give confidence to landlords to let out their vacant premises.
    • Mandatory agreement:MTA mandates for a written agreement for all new tenancies which are to be submitted to a Rent Authority.
    • Digital platform:A digital platform will be set up in the local vernacular language or the language of the state/UT for submitting the tenancy agreement and other documents.
    • Mutual consent: The rent and duration of the tenancy will be fixed by mutual consent between the owner and tenant through a written agreement.
  • Existing tenancies: MTA will be applicable prospectively and will not affect existing tenancies.
  • Position of States: States can adopt the new act as it is by fresh legislation, as it is a state subject, or they can amend their existing rent acts suitably to factor in the new MTA.
  • States and Union Territories have MoUs signed with the Centre under the PradhanMantriAwasYojana-Urbanwhich has this provision.

Need for this Act

  • As per Census 2011, more than 1 crore houses were lying vacant in urban areas across the country and existing rent control laws are restricting the growth of rental housing as they discourage the owners from renting houses due to fear of not getting them back.
  • In absence of a model law, there are informal agreements with arbitrary clauses and often litigation arising out of disputes.
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