Rental Agreement, Rights of Tenant and Landlord

Rental Agreement

The Indian government launched Rental Control Act to control the rent charges and protect the rights of the tenants as well as landlords. In July 2019, the government floated a proposed Model Tenancy Act (MTA) to promote and regulate rental housing in the country.

The following rules are implemented in the Model Tenancy Act –

  • The Security Deposit for residential tenancy is capped at two months and for non-residential tenancy is capped at one month
  • A Rent Authority department will be formed to help and resolve issues related to tenancy
  • A unique identification number will be issued once the executed rental agreement is reported to the Rent Authority. Within two months the executed rental agreement should be reported
  • Provisions that help landlord:
    • The tenants who refuse to vacate the property post the tenancy period will be penalized
    • Without informing the landlord the tenant cannot sublet the property
    • If the tenant fails to pay the rent for a period of two or more months, the landlord can approach the court asking for an eviction
  • Provisions that help tenant:
    • The landlords cannot hike the rent in the middle of an ongoing tenancy period and must give three months prior notice to the tenant before increasing the rent
    • The landlord is responsible for the structural maintenance of the rented property
    • To visit the tenant’s house, the landlord must inform at least 24 hours in advance

The Center has bestowed power to the states to either implement the act or make changes as per their needs. Currently, Chandigarh has started the process to implement the Model Tenancy Act 2020, which was drafted by the Union Ministry of Housing and Urban Affairs. The Maharashtra government has opted for dual rent control laws. For new constructions, the Model Tenancy Act will be implemented, and the existing tenants will be protected under the Maharashtra Rent Control Act, 1999. 

Before renting or letting out a property for residential purpose in India, it is important to have a rental agreement which is subjected to certain rules and regulations. These rules and regulations are listed in a written agreement between two parties i.e. landlord and tenant. The agreement must be dated, stamped, registered, and signed by both landlord and tenant. The valid rental agreement is enforced under the law and protects the rights and duties of the tenant and landlord. The key things that must be included in a rental agreement are as follows –

  • Payment details: The agreement should contain details of the amount paid as rent every month and the due date by when it must be paid. The security deposit amount and when will it get refunded should be included. Additional payments like maintenance charges, water bills, electricity bills, etc. must be clearly stated.
  • Tenancy period and renewal criteria: Generally, the rental agreement is executed for a tenure of 11 months. This can be extended based on the tenant’s and landowner’s interests. The renewal details such as when and how the agreement will be renewed, an increase of rent, and is there room for negotiation should be included.
  • List of fixtures: Details about the floor, door no, address, number of rooms, and so on must be mentioned. In the case of a furnished house, the details of the furnishings should be listed.
  • Restrictions: Before finalizing the house get to know if there are restrictions like pets are not allowed, issues with cooking non-veg, etc.
  • Registration of the agreement: Registration fee and stamp duty must be paid to register the rental agreement, which is shared by the tenant and landlord and this should be mentioned in the agreement. There should be clarity on who shall pay the Brokerage charges, legal fee if any should be mentioned in the agreement.

Rights of Tenant:

The Rental Control Act has given few rights to the tenants, that is –

  • Right against unfair eviction: Without a proper reason or cause, the landlord cannot evict the tenant. If the tenant is ready to accept the changes in rent charges, then the landlord cannot evict him. In some states, the landlords must go to court to evict tenants. Incase if the tenant fails to pay the rent for two months or more after receiving notice from the landlord. The landlord can file a suit against the Tenant to recover possession in states like Maharashtra, Karnataka, Tamil Nadu, and Delhi.
  • Fair Rent: The rent charged by the landlord should bebetween 8% to 10% of the property value. If more rent is demanded by the landlord, the tenant can appeal the court to seek redressal.
  • Essential Services: Even if the tenant fails to pay the rent, the landlord cannot stop him from using water, electricity, and other essentials. In case if there are any repairs in the building, the tenant can serve the landlord with a notice of fifteen days. If the landlord neglects to fix it then the tenant can repair the premises themselves and deduct this expense from the rent. This amount should not exceed one-fourth of the rent payable for that year by the tenant.

Rights of Landowner:

Protecting property from unfair exploitation is the landowner’s responsibility. The rights entitled to landowners are as follows –

  • Right to evict: If the tenant is misusing the property for illegal activities or has damaged the building which has resulted in depreciating the value of the property or if the tenant has allowed someone to occupy the property without landowners consent then the tenant can be evicted.  
  • Rent Charges: The landlord has the right to increase rent on a yearly basis and around 5% can be increased every year.
    • E.g. – In Delhi, the rent can be increased under Section 6A and Section 8. These sections enable the landlord to increase 10% rent every three years.  
  • Temporary repossession of property: In case of any repairs the owner can repossess the property without causing any damage or loss to the tenant.

Credits : Magicbricks

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