“The new law on the lease will strengthen confidence”
Industry Says Model Tenancy Act Will Fuel Rental Housing Market By Attracting More Investors
Hyderabad: The Union Cabinet this week approved the Model Tenancy Act, which aims to bring in reforms to unlock more than one crore of vacant homes and close the trust gap between landlords and tenants.
The law emphasizes the establishment of separate rent authorities, courts and tribunals in each district to ensure prompt resolution of disputes and to establish a rent review mechanism to protect tenants against arbitrary increases while guaranteeing the economic interests of the owners. He tries to find a balance between the interests of landlords and tenants.
It aims to enable the institutionalization of rental housing by moving it to the formal market and to boost private participation in rental housing as a business model to deal with the massive housing shortage. It requires a written agreement for any new tenancies, which must be submitted to the “Rent Authority” of the district concerned. This means that the rent and the rental period will be fixed by mutual agreement of the two parties.
The law further provides for three months notice to tenants for an increase in rents to ensure that landlords are able to extract market price for their properties while ensuring that tenants receive sufficient notice. It puts a cap on security deposits for residential properties, especially in cities like Mumbai (and other parts of Maharashtra) and Bengaluru, which often goes up to 6-12 months.
What industry says?
Asked about the impact of the law on the housing sector, Rakesh Reddy, director of Aparna Constructions & Estates, told Telangana Today: “Anything that helps normalize the real estate industry is good. The sector is largely fragmented. The law will give tenants and owners equal rights. It is a positive gesture. “
This will benefit both the general rental sector as well as segments such as student housing. The intention is good, we have to see how all the states will implement it, he added.
According to Anuj Puri, chairman of Anarock Property Consultants, “The Model Tenancy Act will help bridge the trust gap between tenants and landlords by clearly delineating their obligations and potentially unlock vacant homes across the country. To ensure prompt resolution of disputes, the law also proposes to establish a separate Rent Tribunal and Rent Tribunal in each state / UT to hear appeals regarding rental housing issues.
Puri added, “This law can fuel the rental housing supply pipeline by attracting more investors, and more rental housing stock will help students, working professionals and migrant populations find urban housing. When implemented fairly in all states, it will go a long way in formalizing and stabilizing the rental market. It would also revive fortunes not only in the rental market, but also in the housing sector in general. “
Dr Niranjan Hiranandani, President of Naredco, said: “This law will ensure the creation of new rental housing stock for all income groups, tackling the challenge facing housing seekers. This will help reshape the legal framework for rental housing across the country, which would help boost its overall growth. “
On the past market scenario, Knight Frank India CMD Shishir Baijal, observed: “Although leasing in the commercial real estate segment is a well-established tenet of the market model, the breakdown of the landlord-tenant relationship in the case of the housing segment has discouraged the development of the market. models and hinders the institutionalization of a rental housing market. The Model Tenancy Act contains provisions to regulate the rights and duties of landlord and tenant, which will balance the balance between these two counterparts.
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