Lately the Union Cabinet gave a go-ahead to the Model Tenancy Act and now as States and UTs will begin to implement this revolutionary legislation, apart from the Act, here is a low down on all the advantages that landlord and tenants will have because of the MTA:
1. Higher security deposit concern addressed:
Until now, tenant community particularly in metros including Bengaluru, Mumbai and Chennai faced hardship as security deposit for renting a premise in these cities went as high as five to ten months of the rent. But now on security deposit is fixed at two months rentals for residential real estate. Furthermore, when the let-out property is vacated, the law stipulates that owners or landlords of the property need to return the full caution or security money within a one month period.
2. Unlocking of idle residential units will keep high rentals in check:
As the new law in the tenancy regime would work on unlocking idle residential units and make them available to potential tenants, increased/adequate residential supply in the rental market will ensure that rentals do not surge irrationally as is the case currently in Mumbai where professionals and other migrants need to settle in far-off locations, the reason being rentals there are not affordable.
3. NRIs will begin to rent out their properties in India in increased number:
As the MTA incorporates several of the owner or landlord friendly guidelines in respect of transfer of rent agreement, property damages and sub-letting (i.e. the tenant cannot sub-let part or whole of the property to someone else), the move will help in pushing NRIs to rent out their homes in India in increased number. So, probably NRI-owned homes which until now remained unproductive and non-utilized will be available in the rental space.
4. Both tenants and landlords interest is taken care of in the MTA:
Landlords or those with investment in residential property are apprehensive of renting out their property for a number of concerns such as fear of losing their real estate asset to the tenant (quite a common practice in older days wherein tenant who lived for a substantial time period in the let-out premise used to take hold of the property by wrong means), rental delays and even over-stay of tenants beyond the rent agreement.
Landlord interest or concerns that are addressed:
But now, tenants who do not adhere or follow the rental agreement clause (such as overstay in the let out premise beyond what was agreed upon or make delays in respect of rental payment), will be heavily fined. Notably in case of overstay even after the rental agreement has expired, tenant will need to compensate the landlord by paying double the rent for 2 months, which in some cases may go up to four times.
What Tenants get as per MTA Act?
For the tenant also there is respite as all the maintenance and repair work is to be taken care of by the landlord. This is true in respect of whitewashing of walls, windows and doors. For carrying out any repair or replacement at the let-out property, the landowner needs to give a prior notice of 24 hours.
Furthermore, the landlord cannot hike the rent in the middle of the tenure. Likewise before implementing the rental hike, he or she i.e. the landlord would have to give a written notice at least 3 months prior to revision of rent.
Now, even if the two parties in the rental contract i.e. landlord and tenant do not share a cordial relationship or there is dispute between them of some nature then landlord cannot cut water and power supply to tenants as per the MTA Act.
5. Rent Court or Rent Authority in the offing:
Keeping the best interest of landlords in mind and in a bid to increase the supply of rental accommodations, the centre is keen on coming up with Rent Court or Rent Authority in each of the state and Union Territory for faster resolution of any grievance pertaining to rental matters. In fact a deliberation is also being made to come up with separate courts for dealing with rent related issues.