Policy | Model tenancy act is well intentioned but change unlikely soon

Equally critical, states already have well-entrenched practices whereby the terms of old tenancies are strictly regulated, making it next to impossible for landlords to either substantially raise the rents of such tenants (they are guided by the rates at which such premises were rented out decades ago) or evict them so as to repossess their premises.

The result is the old areas of Indian cities are full of dilapidated houses whose owners have no interest in renovating them as post-renovation they will neither be able to charge market-related rents nor evict tenants who wish to go on paying rent at historical rates plus a small mark-up.

Most significantly, the model act says it will not be applied retrospectively, that is it will govern only new tenancies entered into after the law is passed. So the entire scenario covering old tenancies outlined above will not change.

As for relatively newer tenancies, many states have laws which allow for tenancies or lease agreements to be undertaken for short periods, say 11 months, after which it is fairly easy for landlords to not enter into a fresh agreement and take possession of their premises.

What is more, the act provides for the creation of a rent authority, rent court and rent tribunal to give quick relief to tenants and landlords seeking relief. However, such institutions already exist in many states whereby tenants and landlords can seek legal redress. What the proposed new act will do is create a new and more efficient format that can be used by the states which wish to improve existing setups.

That apart, any new rent authority, which promises relief to tenants and landlords, is likely to be soon inundated by submissions, leading to substantial delay in the delivery of justice that will negate the whole purpose of the exercise. The RTI Act, for example, is currently being negated by the time it takes for an application to come up for hearing.

The current reality and likelihood of a change in it is best highlighted by what young professionals moving into Mumbai come up against. Tenancy agreements are usually for 11 months and involve paying at least one month’s rent as brokerage. How much security deposit is paid depends on the landlord’s power to have her way. If after 11 months a fresh agreement is entered into, usually with a 10 per cent mark-up, the brokerage has to be paid again.

Landlords and brokers often prefer to take in new young tenants instead of renewing agreements with existing tenants. Outgoing tenants seldom, if ever, get back the full security deposit, parts of which are deducted by the landlord under one pretext or the other. New tenants are less likely to fight for their rights. What is more, it is extremely difficult for a tenant to actually get hold of a proper legally admissible copy of the 11-month lease agreement. She is usually fobbed off with a photocopy of the agreement. Such agreements are seldom registered.

Against this reality, let us place some of the key provision of the draft model act. Every tenancy will take place under a rent agreement, which will be registered with the rent authority within two months and be uploaded by the authority at its website in a state language or local vernacular within seven days.

Subletting is not allowed except with the landlord’s permission. (This provision already exists under state laws.) However, what is new and will be useful if actually implemented is a two-month ceiling on security deposit for residential accommodation.

The landlord has to give a signed original copy of the tenancy agreement to the tenant within 15 days of its execution. The tenant is entitled to a rent receipt and if the landlord refuses to accept rent for two months then the tenant can deposit the rent with the rent authority in which case the matter then comes under its adjudication. (Depositing unaccepted rent with the rent authority is already a state practice.)

Landlords and tenants have to carry out repairs as agreed upon and if not done, the affected party can get it done and recover the cost from the security deposit or the rent, as the case may be.

In case the premises have become uninhabitable and the landlord refuses to carry out the repairs, the tenant has the right to leave after giving 15 days’ notice and with the permission of the rent authority. (This is strange as a landlord who wishes to get rid of a tenant will deliberately not carry out vital repairs.)

The act seeks to protect the interests of migrants, formal and informal sector workers and urban poor but doing so in slums and jhuggi jhopri colonies, which are often unauthorised, having come up by squatting on government land, and often run by slum lords, is a different ball game.

Subir Roy is a senior journalist and author. Views are personal.