All About the Model Tenancy Act Approved by Union Cabinet | Kotak Mahindra Bank - Home Loan Stories
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A significant number of people in India live in rented houses. However, due to factors like unpleasant landlord-tenant relationships, damage to properties, delay in rent payment, forceful eviction, etc., there has been constant strife between the landlords and tenants for a long time. To bring transparency to the renting process in India, the Union cabinet approved the Model Tenancy Act on June 02, 2021. If you are planning to purchase a house property, it would be helpful to know about this act.


What Is the Model Tenancy Act? 

The Model Tenancy Act aims to set a three-tiered regulatory mechanism for stakeholders to govern landlord-tenant relationships. It also aims to bring the stock of vacant residential houses under the fold of formal rental housing. It also brings accountability and transparency to the existing framework of renting properties while balancing the interest of tenants and landlords.


Salient Features

The following are the rules under the Model Tenancy Act to be followed by tenants and landlords:

  • A written agreement is needed to let or take on rent any premises, which need to be submitted to the concerned district rent authority.
  • The tenants cannot make any structural changes in the rental property without the landlord’s permission.
  • It is not applicable on hotels, inns, central, government-owned, or promoted properties, lodging houses, dharamshala and non-commercial rental premises.
  • Establishment of rent authorities for the concerned areas under the act to protect the interest of landlords and tenants.
  • Revision of rent should be in accordance with the tenancy agreement.

The security deposit has been fixed for residential and commercial buildings. The security deposit for the residential premises should not be more than two months’ rent and six months’ rent for non-residential property.


How Is it Beneficial?

  • Streamlining the process of renting houses

The act will make the rental housing market more organised and bring reforms in the tenancy rules and regulations. The government expects to witness a boost in the rental-housing segment and bring transparency and trust between the tenant and landlords.

  • Speedy redressal of disputes

Under the act, rent authorities, rent courts and rent tribunals are introduced. It would facilitate speedy dispute resolution and reduce the burden from civil courts for tenant disputes.

  • Equitable rental laws for both landlord and tenant

The act lays down the guidelines and regulations for both the parties (landlords and tenants), clearly defining do’s and don’ts for aspects like rent and charges payable, property repair and maintenance, timings and rules for entry into premises and consequences of violation of laws and rental agreement.


To Sum Up

The real estate market has always been a lucrative investment. However, the old rent control laws restricted the growth of rental houses. The new Model Tenancy Act not only brings transparency to the rental framework but also acts as an encouragement for people to purchase and rent house properties for additional income. And why not? With online interfaces, availing home loan in India is easy and convenient. If you have ever dreamt of owning a house, this could be a chance. Apply for home loan and purchase your dream property today.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.