New tenancy Law

Introduction:

In India there was an act called Rent control Act, which was passed in the year 1948. The main object of the act is to regulate the rules of letting out a house or a property to others. This act intends not to exploit either party i.e. tenant and landlord. Each and every state has its own legislation. There are certain properties that have been let out while still paying the same rent disregarding inflation and increased property valuations.  

The Main aim of the tenancy reform is regulation of ownership of land on tenant, provide security of tenure and conferring ownership to tenant. This act aims to promote rental housing by balancing and protecting the interest of both the tenants and landlords by renting premises. The rapid pace of urbanization in the state has resulted in a lack of availability of housing in urban areas, including the majority of rental housing. There already exist local rent laws of each State, with the Model Tenancy Law coming into force, the State Governments can enact and pass afresh entirely a new rent legislation repealing the previous Rent Act or they can amend their existing rent law to include the provisions of the Model Tenancy Law. The new tenancy reform enabled the state government to regulate new rules according to the new legislation. The New Tenancy Act in Tamil Nadu has reflected the struggle between the landlord and tenants. A portal was launched to educate the tenants and landlords about their rights and responsibilities. The act is now replaced by Tamil Nadu Buildings (Lease and Rent Control) Act, 1960, also known as the Rent Control Act.

Rights of the tenant:

1.     Right against unfair eviction
2.     Fair rent
3.     Essential services such as water, electricity and other fixtures of the property like fans, lights and so on.

Rights of Landlord:

1.     Right to evict by himself, in many case people approach court to evict the tenant.
2.     Charge rent, the owner or the landlord could increase the rent periodically every year by 5% to 8%.
3.     In case of suit, this agreement acts as a document for the suit to support their stand.

Applicability of the Act:

The act applied to all tenancies, i.e. residential and commercial tenancies within Tamil Nadu. It doesn’t apply to the following entities:

1.     Entities under the factories act, 1948
2.     Governmental bodies
3.     When an employer offers accommodation as a part of the contract
4.     Accommodation given or provided by religious and charitable institution
5.     Entities under trust act, 1882
6.     Waqf properties made by Muslim for religious reasons.

Amendments made to Tenancy Act:

1.     Tenancy Agreement:

According to the new amendment, this act applied to all those agreements which were entered into before the act came into existence. The rental agreement should be in writing for all new tenancies, the said agreement has to be submitted to the concerned District Rent authority.

2.     Rent receipt: The act mandates issuance of rent receipt signed by the owner or the landlord on payment of rent for the premises.
3.     Sub letting of premises: A tenant can’t sublet the rental premises without prior consent of the landlord. The subletting rent should not be more than the principal rent. Under the new act, even subletting is considered as a separate tenancy. It should be registered separately with the rental authority.
4.     Registration: In old rent control act if the agreement exceeds 11 months or Rs. 50,000 then it is mandatory to register. But in the new act, all tenancy agreements should be registered with rent authority regardless of the term and value of the tenancy which was rented.
5.     Registration process: The tenant or owner or property manager could make an application under this act. Even if there was an oral agreement before the commencement of the act, it is necessary to register the same by putting down in writing, within 90 days from the date of notification of the act. In case of a new agreement it must be registered with rent authority within 90 days from the date of execution of the agreement. In case of failure to register the agreement will minimize the initiation of suit in tribunal.   
6.     In case the tenancy period ends or fails to renew or fails to vacate the premises after expiry of the agreement, in such cases it shall be treated as if the agreement was renewed every month on the same terms of condition for another 6 months.
7.     Security deposit: Amount of security deposit should not exceed two months rent for residential premises and 6 months for non residential premises.
8.     No property manager could withhold the essential supplies which are to be provided to the tenant.
9.     Eviction:  To evict a tenant, the landlord must apply to the Rent Authority seeking such eviction.  The Authority may make an order for eviction on certain grounds including: (i) refusal to pay the agreed rent; (ii) failure to pay rent for more than two months; (iii) parting of possession of part or whole of premises without written consent of landlord; (iv) misuse of premises even after receiving written notices to desist from such misuse; and (v) structural change by tenant without written consent. 
10. In the case of force majeure conditions such as earthquake, cyclone, war, flood etc., certain advantages and concession shall be provided to the tenant and if the tenant is in the termination period, then leniency of an extra month shall be given for him to have enough time to vacate the premises. In case the premises has been affected so badly due to force majeure condition that it is impossible to reside in it, then the rent shall not be charged till the time the premises has been restored and made inhabitable.
11. Rent Courts and Rent Tribunals to be set up at district level to deal with landlord-tenant grievances on a time-bound basis though no specific timeline.

In Tamil Nadu:

Tenant means a person by whom or on whose account or on whose behalf the rent of any premise is given. Landlord means the person who is entitled to receive the rent of the premises. Tenancy agreement means a written agreement executed by the landlord and the tenant as required, it shall include a sub tenancy agreement and sublease agreement too. Chief minister of Tamil Nadu began an exclusive portal www.tenancy.tn.gov.in under the new act called the “Tamil Nadu regulations of Rights and Responsibilities of Landlords and Tenants Act 2017”. This was meant to balance the rights of the tenants and owners. It replaced the old Tamil Nadu Buildings (Lease and Rent Control) Act, 1960. Under the law, a written agreement between the two parties indicating all terms and conditions of the tenancy is mandatory. The agreement must be dated and signed by both the parties, it must be in writing, it should be stamped and registered and if the agreement is not made then it cannot be protected by law.

Impact of the new amendment:   

1.     A check on higher demand for deposit: In many cities the deposit demanded by the house owners is hefty and mainly in Metro places, including bengaluru, Mumbai and Chennai. Many found it difficult to pay such a huge amount of money. But now as a result of the new law, the security deposit for renting a premise is fixed at two months. In case of letting out property for rent the owner has to return the full caution or security money within one month period.
2.     Productivity of NRI owned homes: Several owner or landlord guidelines in respect of transfer of rent agreement, property damages and sub – letting. This will help in pushing NRIs to rent out their homes in India. Thus increasing the availability of houses for rent and this non-utilization will be available in rental space.  
3.     Protection of both tenant and landlord interest: Many landlords or owners have the fear about the tenant who resides in their property. There are certain situations, when people lose their land to their tenants. This situation arises when a tenant resides in a house for a longer time. This new act protects from rental delays and over stay by the tenant.
4.     Reduces minor dispute
5.     Multiplicity of authorities: The new tenancy act has established a new authority while already an authority was present. This amendment has created a new process and separate authority instead of amending the existing one.
6.     The new law has failed to substantively protect tenants from racial discrimination, which is experienced by individuals on the basis of sex, unmarried couple, bachelors and other ways of discrimination.

CONCLUSION:

Over the last few decades, a desire for ownership to a need for accessibility has resulted in the growth of rental housing as the most realistic and practical option. Despite the increased reliance on rental housing, the market has yet to see an expansion in the amount of money invested. The ‘Model Tenancy Act of 2021’ aims to close that gap by formalizing the rental housing sector and establishing a standard legislative framework targeted at reducing housing shortages and increasing rent yields. The MTA also ensures that any disputes that may arise throughout the tenancy time are resolved more efficiently and quickly. The law also protects the interests of both tenants and landlords in tenancies, and it outperforms its predecessor in a number of ways. Despite its commendable aspects, the law’s success, like those of other model policies, remains largely questionable. The lack of institutional backing, enough resources, and devoted efforts, the states’ prerogatives, combined with their likely refusal to adopt the policy, could diminish its effectiveness. The modern tenancy law has benefitted both the owner as well as the tenant, but lacks in certain aspects as mentioned above. There is a need for a change or amendment in the new tenancy law.