The Draft Model Tenancy Act 2015 appears promising and might provide the much-needed impetus to transform Mumbai's rental scenario
The current NDA government recently, announced to move the Draft Model Tenancy Act 2015, which was earlier initiated by the erstwhile UPA government. This move has been introduced as an improvement on this draft's obsolete predecessor, the Rent Control Act, 1948, which had become totally outdated. The Rent Control Act was applicable only to the tenancy of more than 12 months. It had put a cap on rent and made it extremely difficult to evict a tenant who is at fault in terms of the payments. This Act had made it difficult for the landlords who were short-changed.The new Act will ensure that the landlords are able to charge market rates for their residential and commercial properties. Talking about this new draft, Sanjay Dutt, executive managing director, South Asia, Cushman & Wakefield, avers, “If this act is implemented, it will unlock a huge amount of rental stock into the market as more property owners will be encouraged to rent houses and commercial properties. Currently, not many property owners rent out properties and primarily depend on capital appreciation for returns as the rental yields are very low.“
Presently, as most of the laws in various states have become archaic and are not serving the purpose of the current date and age, tenants also have to undergo the harrowing experience of either giving in to arbitrary rent hikes or face eviction.
It is likely that once this Act is implemented, all states and union territories will also implement the essence of the proposal since it is beneficial for both landlords and tenants. Himanshu Pawar, a property dealer says, “The government authorities are aware of the current situation and will have to bring about a positive change by way of this new draft.“ Since land is a state subject, the new Act will not bind the states and therefore, it is being called as a draft.Once this draft is finalised, it will rest upon the states whether or not to introduce this.
Although the states may not be too quick to pick it up, eventually, seeing its applicability, most states would accept it. Ashwinder Raj Singh, CEO, residential services, JLL India, concludes, “This draft, if implemented, will work well for both, as it will enable one to avoid arbitrary hikes. Also, landlords will not be able to evict tenants according to their whims and fancies.“
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