The Union Cabinet has approved the Model Tenancy Act to be sent to the States and Union Territories to enact legislation or amend laws on rental properties. The meeting was chaired by Prime Minister Narendra Modi.
Under the Constitution, “land” falls under the State List while “acquisition and requisitioning of property” comes under the Concurrent List, empowering the Centre as well as the states to legislate on the matter.
The model Act, if passed by the States and UTs, would prescribe the norms for lease agreements, deposits, dispute handling and other aspects of rental properties.
Features of the Model Tenancy Act
☆ There is a cap of two months rent on the security deposit to be paid by tenants for residential properties and six months rent for non-residential spaces.
☆ It has a provision of appointment of a rent authority to settle disputes in each district.
☆ The Act also says that it is mandatory to have a written agreement between the property owner and the tenant.
Benefits of Model Tenancy Act
☆ It will help overhaul the legal framework with respect to rental housing across the country.
☆ It will enable creation of adequate rental housing stock for all the income groups thereby addressing the issue of homelessness.
☆ The Model Tenancy Act will enable institutionalisation of rental housing by gradually shifting it towards the formal market.
☆ The Model Tenancy Act will facilitate unlocking of vacant houses for rental housing purposes.
☆ It is expected to give a fillip to private participation in rental housing as a business model for addressing the huge housing shortage.
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