Model Tenancy Act: Real Estate Industry Outlook

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NewsBarons connect with Real Estate Industry Leaders for their opinion on the government’s approval of the Model Tenancy Act.

Highlights:

• The Act proposes to establish an independent authority in every state and UT for registration of tenancy agreements
• Separate court to take up tenancy related disputes
• Limits tenant’s advance security deposit to a maximum of two month’s rent and maximum of six months for non-residential purposes
• The Model Tenancy Act will facilitate unlocking of vacant houses for rental housing
• The Model Tenancy Act will apply to premises let out for residential, commercial or educational use

The Model Tenancy Act will ensure creation of new rental housing stock for all the income groups: Dr. Niranjan Hiranandani

www.newsbarons.comThe Model Tenancy Act will facilitate unlocking of vacant houses for rental housing purposes. It is expected to give a fillip to private participation in rental housing as a business model for addressing the huge housing shortage. The Act will enable institutionalisation of rental housing by gradually shifting it towards the formal market.

Industry bodies like NAREDCO have been requesting authorities for a Model Tenancy Act which would create a vibrant, sustainable and inclusive rental housing market in the country. This Model Tenancy Act will ensure creation of new rental housing stock for all the income groups, addressing the challenge being faced by home seekers.

There was a need for a new law, which would make things easier for all stakeholders – tenants, landlords and investors – to transact and deal in rental housing. The Union Cabinet, has approved the Model Tenancy Act for circulation to all States / Union Territories for adaptation by way of enacting fresh legislation or amending existing rental laws suitably. This will help overhaul the legal framework with respect to rental housing across the country, which would help spur its overall growth.

[Dr. Niranjan Hiranandani is the National President of NAREDCO]

The Model Tenancy Act has provisions to regulate the rights and duties of both the landlord and tenant: Shishir Baijal

www.newsbarons.comIn the recent past, a spate of policy reforms in quick succession have accelerated the development of Indian real estate sector into a more mature and organised sector. Laws relating to RERA, REIT, GST and now Tenancy will aid the property sector’s transformation into a more transparent and consumer focused one; and thereby attract the world’s best institutional investors and developers for greater participation in the country’s realty sector.

While tenancy in commercial real estate segment has been a well-established tenet of the market model, the fractured landlord tenant relationship in case of housing segment has discouraged development of market model and obstructed institutionalisation of a rental housing market. The Model Tenancy Act has provisions to regulate the rights and duties of both the landlord and tenant and this shall balance the scale between both these counter parties. We believe this law is a step in the right direction and are glad to see that in just under two years since the introduction of model law, and amidst the pandemic, this will become a ground reality.”

[Shishir Baijal is the Chairman and Managing Director of Knight Frank India]

The Model Tenancy Act will help bridge the trust deficit between tenants and landlords: Anuj Puri

www.newsbarons.comAt long last, The Union Cabinet has approved the long-pending Model Tenancy Act. India’s States and Union Territories can now accordingly adapt and enact new laws or amend their current rental laws to dovetail with the Act.

The Model Tenancy Act will help bridge the trust deficit between tenants and landlords by clearly delineating their obligations and will eventually help unlock vacant houses across the country. To ensure speedy redressal of disputes, the Act also proposes to establish separate Rent Court and Rent Tribunal in every state/UTs to hear appeals for matters connected to rental housing.

This Act can fuel the rental housing supply pipeline by attracting more investors, and more rental housing stock will help students, working professionals and migrant populations to find urban accommodation (especially in COVID-19-like exigencies). Once implemented in all fairness across states, it will go a long way in formalising and stabilising the rental market. It would also revive the fortunes of not just the rental market but the housing sector at large.

However, even while the Model Tenancy Act is a step in the right direction (providing a clear roadmap for states to follow) it will remain to be seen to what extent the states will toe the central government’s line.

[Anuj Puri is the Chairman of ANAROCK Property Consultants]

The act will help reduce slums and also improve the quality of housing in the country: Ramesh Nair

Monetary Policy February 2021Housing for all cannot be successful without a robust rental housing model. The act will help reduce slums and also improve the quality of housing in the country if well implemented. All efforts of previous governments have focussed only on the ownership of housing. A robust implementation can also help attract FDI given the current interest levels of global real estate funds towards “beds” (residential rental) and “sheds” (warehousing).

[Ramesh Nair is a real estate industry veteran and former CEO of JLL India]

The Act proposes to establish a Rent Authority for regulating the renting of premises in an efficient and transparent manner: Mani Rangarajan

www.newsbarons.comIndia’s urban population has to unfortunately struggle to find decent rented accommodation even as millions of properties lie vacant across major markets. The Model Tenancy Act 2019 proposes to establish a Rent Authority for regulating the renting of premises in an efficient and transparent manner and to balance the interests of the owner and tenant by establishing an adjudicating mechanism for speedy dispute redressal and to establish Rent Court and Rent Tribunal to hear appeals and for matters connected therewith or incidental thereto.

It will be able to change this paradoxical situation. Provisions announced in the model law would make renting a viable option for tenants as well as property owners, if states show the willingness to adopt it in letter and spirit.

[Mani Rangarajan, Group COO, Housing.com, Makaan.com & PropTiger.com]

The approved Model Tenancy Act will help to regulate and promote rental housing in the country: Rohit Poddar

www.newsbarons.comThe approved Model Tenancy Act (MTA) will help to regulate and promote rental housing in the country and will play a crucial role in increasing the supply of rental homes, which in coming times, will be an essential requirement with rising population. The Act will help in building a better tenancy market. The terms and conditions of the rental tenancy are clear to both landlords and tenants and reduce a significant number of disputes that take place due to unwritten agreements, thus the move will benefit both the landlords and tenants by creating a cohesive and sustainable environment. The approved framework will boost the overall rental housing market in India.

[Rohit Poddar is the Managing Director of Poddar Housing and Development Ltd.]

The act is also expected to unlock a huge residential stock: Altaf Ahmad

The Cabinet has approved the much-needed Model Tenancy Act today indicating its intent on rendering the highly unorganized rental market into an organized one. Due to being unregulated, the residential rental market in India has always had a history of being unscrupulous. This Act would certainly, go a long way in cleaning up the rental market in India as it addresses issues such as the rent and security to be charged, safeguarding tenant rights, rate of rent increase etc.

Further, the act is also expected to unlock a huge residential stock, that is currently lying vacant, for rental purposes. Built homes lying vacant is highly ironical for a country like India where housing shortage is a pressing concern. This Act will not only solve this conundrum but will also attract private sector participation in rental housing.

Thus, the Act is expected to be a two-pronged solution: Formalizing the rental market in India and contributing to reduce the housing shortage in the country which in turn aids in the government’s mission of Housing for all by 2022.

[Altaf Ahmad is the CBO of Rental Business of Square Yards]

The Model Tenancy Act will boost supply in the rental housing segment: Pritam Chivukula

www.newsbarons.comThe Model Tenancy Act will boost supply in the rental housing segment. There are many homes that are vacant as people fear to give them on rent. The Act will make renting more lucrative for both, landlords and tenants, by plugging the many gaps that currently exist in policies regulating the rental housing segment. The model tenancy law will eliminate anomalies and give a boost to the real estate sector.

[Pritam Chivukula is the Co-Founder and Director of, Tridhaatu Realty and Hon. Secretary of CREDAI MCHI]

The Model Tenancy Act will protect the interest of both renters and the landlord: Kaushal Agarwal

www.newsbarons.comThe Model Tenancy Act will protect the interest of both renters and the landlord. While tenants have to submit at least a year’s rent as security deposit it will also address the overstay by tenants and make eviction easy for landlords. Even if states set up the regulatory framework, it is up to the developers as to how comfortable they would be to engage in this housing segment as the rental yield that varies anywhere from 2% to 3% may not be lucrative enough for them. Compared to this, the developers pay higher interests on their loans for project development.

[Kaushal Agarwal is the Chairman of The Guardians Real Estate Advisory]

Rental bonds coupled with the new act will provide the much-needed ease of renting the houses for landlords: Pankaj Bhansali

The Cabinet approval for the Model Tenancy Act will provide the much-required boost to Rental Housing in India. It is a landmark reform that will usher in a new era for the real estate sector in the country. The move will help address the high number of vacant residential units in India, which is over 11 million houses, making it economically productive, reducing litigation, and encouraging trust between the landlord and the tenants. The new model Tenancy act will also encourage and attract institutional investments into the residential assets

Rental bonds coupled with the new act will provide the much-needed ease of renting the houses for landlords. Rental Bonds and the provisions of the model tenancy act will help address the friction points in the tenancy process, thus promoting trust between the landlord and the tenant. The new act would bring in over 11 million urban houses into the rental market and help address the country’s massive housing shortage.

We expect states to act swiftly and adopt the law, have the necessary regulatory structure in the form of state tribunals to adjudicate on the required matters and provide a common framework across the country. The rental yield in India is amongst the lowest in the world. The Act once adopted and enforced by states promises to create a sustainable and inclusive rental housing market in the country. Like the RERA law, the Model Tenancy Act will reform the rental housing business in India with utmost transparency.

[Pankaj Bhansali is COO of Eqaro Guarantees Pvt. Ltd.]

The Model tenancy Act lays down a clear blueprint of roles and responsibilities of all major stakeholders: Abhishek Jindal

The Model Tenancy Act being approved by the Union Cabinet is a highly welcome and extremely promising development for the rental housing industry in India. This Act can prove to be a game-changer when it comes to formalization and standardization in rental housing. It will also improve trust, accountability and communication between and for tenants and landlords as well as other key stakeholders in the rental housing space. Additionally, this Act lays down a clear blueprint of the roles and responsibilities of all the major stakeholders. While statewide implementation of the act may take up to some months or years, but even then, this Act will facilitate a major boost to our nation’s rental housing ecosystem and economy, and further the Government’s vision of “Housing for All”.

[Abhishek Jindal is the CEO of OwnersTown]