On June 2, 2021, the Union Cabinet has approved the Model Tenancy Act (“MTA”) for circulation to the States to adopt or amend their State rent control to bring them in line with the MTA.
The MTA brings about a refreshing energy to the ancient existing Rent Control Acts. In Maharashtra, we currently follow the Maharashtra Rent Control Act, 1999 (“Act”). We will be discussing the significant changes that the MTA will bring to the Act.
The MTA aims to establish a Rent Authority for regulating renting of premises efficiently and transparently and balancing the interests of owner and tenant by establishing an adjudicating mechanism for speedy dispute redressal and establishing Rent Court and Rent Tribunal hear appeals and for matters connected therewith or incidental thereto.
MTA requires the agreement to be in writing - every person who gives or takes a premise on rent should have a written agreement.
The MTA provides a Standard form of agreement – it contemplates having a standard form of agreement that is required to be submitted to the Rent Authority, which will be established under the MTA.
Unique Identification Number (UID) - After the agreements have been submitted, the Rent Authority is required to provide UID to the parties and upload details of the agreement submitted by them in the local/vernacular language within a period of 7 (seven) days from the date of the document being submitted.
Sub-letting- this would require the prior written consent of the landowner.
Deposit capped – the deposit to be provided for the rented premise is capped at two months’ rent.
Severe Penalty on Tenant for Overstaying - A penalty of twice the rent for overstaying by up to two months, and the fine goes up to four times the rent for overstaying for more than two months.
Repossession - The MTA allows repossession of property by filing an application with the Rent Authority if the tenant disagrees on the rent. Repossession can also happen if the Rent arrears pile up for more than two months or the premises are required for construction, repairs or alterations.
Appointment of Rent Authority and Rent Tribunal – establishing these two authorities in every state to deal with the rented property matter. Jurisdiction of civil courts would be barred. The Rent Authority would not be bound by the rigours of the Civil Procedure Code and shall be guided by the principle of natural justice, and shall have the power to control its procedure. Rent Court to dispose of cases within a period of 60 (sixty) days of its institution. Rent Tribunal is the appellate authority to the Rent Authority.
The MTA has been drafted keeping in mind the changing mindset from owning properties to renting properties. The concepts of renting, leasing, co-living and co-working have been on the rise for this very reason. Facilitating the ease in doing business in the rental segment simultaneously protecting the rights of the parties involved, both the Owner and Tenant, is the aim of MTA.
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