The newer model implemented by the central government, Model Tenancy Act, keeping in view the best of interest of both the landlords and tenant is seen as a positive by property developers who foresee it to boost the business in rental housing space by a great deal.
So, here we provide you with the fine print on the new initiative aimed at strengthening the rental business in India which every landlord and tenant should ideally be aware of:
1. Security deposit capped: The caution money i.e. to be kept with the landlord on renting a premise has now been capped, with 2 months' rent in case of housing and one-month rent in case of other properties. But the move is seen as a dampener by property markets as in case of severe damage to the property, the amount is seen to be not sufficient. Also, it will hurt the sentiment in cities, where a higher deposit was asked for, for renting a premise.
2. Landlords cannot refuse on providing essential utilities and access to facilities that are commonly provided.
3. Also, the act will penalize tenants who refuse to vacate the premise after the term of agreement between the two parties' expires. And as a compensation, property owners will be able to charge double the rent for an overdue period of two months and four times if the period exceeds this threshold term specified of 2 months.
4. Rental cannot be increased in the middle of the term of the agreement. Also a prior notice of 3 months has to be given to the tenant, when bringing about a hike in premises rent.
5. Also, after the Act takes shape or is enforced lawfully, no premise can be let out or rented without an agreement in writing.