The Central government released the Draft Model Tenancy Act (2021) (‘the MTA’) on 2nd June, 2021, to institutionalise rental housing in India. The MTA, if adopted by state governments in India, will result in the repeal of the prevailing rent control legislations in the states.
The MTA 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 MTA 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.
Role of the Rent Authority
Under the MTA, the Rent Authority will become the registering authority of all tenancy and sub-tenancy agreements in residential and commercial premises
- It is mandatory for the Rent Authority to issue a unique identification number to the transacting parties and upload the details of the tenancy agreement on a dedicated web portal within 7 days of its registration of the agreement
- The Rent Authority is empowered to revise and decide a new rent in the event of a dispute over the fixing of the rent payable between the parties
- The Rent Authority is entitled to enforce the eviction of a tenant if he violates the terms of the tenancy agreement
Under the rent control regulations, adjudication of tenancy-related disputes took place in civil courts. This dispute resolution process was very time-consuming, creating a need for a mechanism which would allow for a more efficient adjudication of disputes. The MTA therefore provides for Rent Authorities, Rent Courts and Tribunals which are all to replace civil courts in the adjudication of tenancy-related disputes.
The Rent Authority is the lowest tier in this adjudication mechanism; the Rent Courts and Rent Tribunals are both empowered to hear appeals against the decision of the Rent Authority. The Rent Tribunal is empowered to hear appeals against the decision of the Rent Court.
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