Q) Discuss the major provisions and significance of the Model Tenancy Act (MTA), 2021
Why this question?
Issue of current importance
Key demand of the Question
Provisions and significance of MTA, 2021
Discuss – This is an all-encompassing directive – you have to debate on paper by going through the details of the issues concerned by examining each one of them. You have to give reasons for both for and against arguments.
Give an overview of the MTA, 2021.
In the first part, highlight the major provisions of the Model Tenancy Act, 2021.
In the next part, highlight the significance of the Act.
Conclude with a way forward.
The Union Cabinet recently approved the Model Tenancy Act (MTA), 2021 for circulation to all States / Union Territories. The Act aims to streamline the process of renting property in India and aid the rent economy in the estate sector. It will create a vibrant, sustainable, and inclusive rental housing market in the country. States can either enact fresh tenancy legislation or amend existing rental laws.
Major provisions of the Act
- Rent Authority- The Act requires establishing rent authorities in every district to regulate renting of premises. Authority will protect the interests of landlords and tenants. The proposed authority will also provide a speedy adjudication mechanism for the resolution of disputes.
- Security Deposit- The act puts a cap on the amount of security deposit. It will be a maximum of two months of rent in case of residential premises and six months in case of non-residential premises. Currently, this amount differs from one city to another. For instance, in Delhi, the deposit is usually two-three times the monthly rent, but in Mumbai and Bengaluru, it can be over six times the monthly rent.
- Increase in Rent- The rent can be revised according to the terms and conditions mentioned in the agreement. If there is no such agreement, the landowner will have to give a notice in writing to the tenant, three months before the due date of revised rent.
- Vacating Rental Premises- The act has provided a mechanism for vacating the premises. It says that if a landlord has fulfilled all the conditions stated in the rent agreement – giving notice, etc., then the tenant has to vacate the premises. If the tenant fails to vacate the premises on the expiration of the period of tenancy or termination of tenancy, then the landlord is entitled to double the monthly rent for two months and four times after that.
- Entering of Rental Premises- Every landlord or the property manager may enter the rented premises in certain conditions. Like he/she needs to serve a notice, in writing or through electronic mode, to the tenant at least twenty-four hours before the time of entry.
Significance of the Act
- The authority will provide a speedy mechanism in resolving disputes and other related matters.
- 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.
- It will enable institutionalisation of rental housing by gradually shifting it towards the formal market.
- It is expected to give a fillip to private participation in rental housing as a business model for addressing the huge housing shortage.
However, there are still some concerns like the non-binding feature of the Act, pace of implementation of the law, heavy penalties on the tenant, etc., but the Act is definitely a great step in building a level playing field between the tenants and the landlords. It is an important piece of legislation that promises to ease the burden on civil courts, unlock rental properties stuck in legal disputes, and prevent future tangles by balancing the interests of tenants and landlords.