Policy Update: Assam Becomes First State to Adopt the Model Tenancy Act (2021)

Model Tenancy Act Aug 31, 2021

The Assam Legislative Assembly passed the Assam Tenancy Act in August to replace the Assam Urban Areas Rent Control Act of 1972. The Assam Tenancy Act (the 'Assam Act') of 2021 is formulated in line with the Model Tenancy Act (the 'MTA') released by the Centre in June, 2021. Assam became the first state to adopt the MTA.

About the Assam Model Tenancy Act

The Assam Act, like the Central MTA, seeks to institutionalise rental housing in the state. It proposes a three-tier quasi-judicial mechanism to govern tenancy agreements in residential and commercial premises and undertake dispute resolution by instituting district-level Rent Authorities and Rent Courts along with state-level Rent Tribunals. The Act also moves away from the mechanism of imposing a ceiling on rent, and allows landlords to charge the rent based on the market value of the property. Thus, the passage of the Assam Act has led to the repeal of the Assam Urban Areas Rent Control Act of 1972.

The Model Tenancy Act is only the recent comprehensive plan to regulate the rental housing sector in India, out of a series of other regulations which were previously introduced by the government. And although nation-wide policies were earlier formulated, they only partially came to fruition in implementation. For rental housing to be reformed in the entire country, it is important that every State government adopts the MTA following Assam.

Benefits of the new Act

The new Act seeks to reform rental housing. The implementation of its provisions can have the following benefits-

  • Dismantling of the prevailing rent control regime- Apart from the freezing of rents at rates substantially below the prevailing market rate disincentivized landlords from investing in the improvement of their properties causing the gradual dilapidation of rent-controlled properties. The adoption of the new Act, by dismantling rent control, has the potential to rationalize the rental housing sector.
  • Providing an impetus to the rental housing sector- It is expected that rental housing will receive a boost by unlocking vacant houses for renting purposes and promoting private participation in addressing the housing shortage; since the new Act proposes to establish a separate mechanism for the efficient redressal of disputes it is expected to generate confidence among home-owners.
  • Capping of security deposit- The new Act can also benefit tenants in cases where landlords often ask for a large security deposit. Since the new Act imposes a ceiling on the amount of security deposit which can be demanded by the landlord, its adoption is expected to increase affordability in the rental housing sector.

Image by Navarun Balshya, Unsplash

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