How is Regulation of Letting Done in India & its Legal Obligation
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This Blog is written by Divya Bhargava from Indore Institute of Law, Madhya Pradesh. Edited by Ujjawal Vaibhav Agrahari.
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INTRODUCTION
The meaning of “Regulation of Letting” means “to rent another person his/her accommodation”. For purpose of renting properties to other people, there should be a rent agreement (for legal verification) between two persons. In simple terms, a rent agreement is a legal document which is also known as a contract[1](proposal and acceptance from both sides of the parties are known as a contract, here communication and consideration [2] between both sides of parties play a major role in a contract) it is a contract between a landlord (owner of the house) and tenant for a fixed period, that discussed principles under which the tenant has the temporary possession of the property [3]. The agreement between both the parties should be in written agreement because it is legally binding upon the law. While having an agreement, both the parties should be vigilant enough to make a contract and respect each other rights and regulations [4].
The tenant-landlord relationship is the most unavoidable connection that we discover quite possibly most complicated. Under section 17 of the Registration Act [5], an arrangement of the contract between landlord and tenant should be of 12 months and should be registered in Sub-Registrar’s office.
Rent agreement laws in India are the state laws enact to govern the rental agreement in various aspects. These fall under the Rent Control Act. Each state has its rent control act. Rent Control Act (1999), Maharashtra Rent Control Act (1958), Delhi, Tamil Nadu Buildings (Lease and Rent Control) Act (1960) governs the state rent agreement [6].
SIGNIFICANCE OF THIS DEVELOPMENT
In the early period of time due to lack of security and law, the people used to make fools of other people who rent their house to them as they did not properly maintain them and use the place for illegal use, however, the landlords sometimes violate the rights of a tenant. After observing these things happening in daily life, a law was proposed in order to protect both the rights of landlord and tenant and give them security the act which was proposed was called Rent Control Act,1958 [7]. The role of individual states is to enforce the rent control act.
A rent agreement should be established between the parties, it ensures that the parties have legal recourse later in the case of landlord and tenant. The Rent Control Act aims to protect the tenant from paying more than the standard rent. The rental agreement has the advantage that it serves as legal evidence for both parties and protects the landlords in future disputes. The development of regulation of letting is that it creates a contract between both the parties for a fixed period so that if one party breaches the contract, violates the rights of privacy of another party, or misbehave then another party can seek redressal from the other party. Now, as per new development a new act i.e. “The Model Tenancy Act,2019”, establishes the Rent authority for regulating 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 [8]. The new act helps to seek redressal and to establish the rent control and rent tribunal and rent authority to decide the issues with the landlord and tenant.
The procedure should be followed before letting a property.
In India, renting or letting a property for a residential or commercial purpose is subjected to follow some rules:
1. A written agreement–
In India, the contract between two parties should be in written form because it is more lawful binding than an oral agreement, though both the agreement is lawful binding however it is always difficult to prove the existence or exact terms of the agreement. Under section 92 of the Indian Evidence Act [9], it is said that the written agreement will always prevail over an oral agreement. The authenticity of the written agreement will always more than oral agreement as the oral agreement is riskier in nature.
1) A ‘legal form’ should be signed between both parties.
2) An agreement should be sent without the changes, if the changes will be made in the agreement, then it will be rectified.
3) The agreement must be stamped and registered under Sub- Registrars’ office [10].
4) Without a valid rental agreement, the rights and duties of the landlord and the tenant cannot be enforced by the law [11].
IMPACT
Impact of Rent Control Act
The Impact of Rent control has affected the legal system. This article will talk about the legal obligation of the Rent control Act.
1. The laws relating to the landlord rights can also be found in the Transfer of Property Act, 1882. In the Rent control act, it is said that the landlord cannot start an action where the rent control act applies, unless he can prove that the existence of one of the grounds evictions under this act whereas the transfer of property act, talks about that a landlord can immediately start an action for eviction of the tenant on expiry of notice u/s 106 of Transfer of Property Act,1882[12].
2. Some provisions of this law have been denounced by the court.
3. The negative impact of the rent control act is on investment in new rental housing and supply from the existing stock of housing. This is not due to low rents but also due to fear of losing of house and tenant together [13].
4. Withdrawal of supplies from the house is very difficult, even though evicting the tenant is also quite difficult, and when the landlord recovers the premises the disincentive to re-let the premises is very high. A large number of vacancies is evidence of time [14].
5. The different demonstrations relating to the control of accommodation in urban areas including the rent control act are instances of the right to hold and discard the properties under article 19 (1) (f) of the Indian Constitution [15].
6. Due to the rent control act, it is moderate the growth of rental housing and discourses the owner from renting their vacant house due to fear of repossession.
Impact of New Model Tenancy Act,2019
The main aim of this new act is to create a more lucrative environment for renting for the tenant as well as landlord and also increase the availability for tenants, but the act also has both advantages and impact of act on society but here in this article, I will discuss the impact of this news on society.
1. The subletting of the place should be done with the consent of the owner i.e., the landlord, and no structural change should be done by the tenant without the written consent from the landlord.
2. According to this act, the landlord owner cannot enter the premises within 24 hrs prior notice to carry out repairs and replacements.
3. In this new act it is said that for all types of repairs and replacements in the house, the money would be deducted from the security deposit or rent, as applicable if a party refuses to carry out their share of work [16].
4. The rent court allows the repossession of premises by the landlord if the tenant misuses the premises. Here the term “Misuse of the premises” means public nuisance, damage, or its use for “immoral or illegal purposes”. If the tenant refuses to vacate the premises, the landlord can claim the double monthly rent and four times of monthly rent thereafter [17].
STATUTORY PROVISION(S)
The Rent Control Act, 1948
The Rent Control Act was passed in the year 1948 by the legislature. It regulates the rules of rents and protects the landlord as well as tenant & ensures that neither landlord nor tenants get exploited, each state has its rent control act but somehow there is a minor difference. In 1948, when this act came into existence this act was extremely stringent and pro-tenant, the real estate market has had some difficulty in growing in some areas [18].
Rent Control Act has been implemented by the state government for the landlord and tenant. It is a familiar act that shelters both the landlord and tenant. This act protects from the amplify of rent and eviction. Hence, the rent control act was abused by the tenant to continue to pay the fixed rents irrespective of inflation and the realty boom.
Under this act, it deals with the fixing of the standard of rent, in most instances the rent control act has a standard provision for the standard of rent and permitted an increase of rent each year. A tenant could have easily had the court intervene in the landlord-tenant relationship to fix a standard acceptable increase of rent as per the rent control act. The main provisions behind this act to prevent the tenants from harassing and encouraging fair return on the investment by the landlords.
New Model Tenancy Act,2019
The aim of this act is to formalize the shadow of the market of rental housing, unlock the vacant properties, increase rental yields, ease/remove exploitative practices and increase transparency and discipline.
After the amendment of this act, no one can take or rent any premises except by an agreement in writing. The draft of the Model tenancy act will give a boost to private participation in this segment.
1. The act seeks to penalize those tenants who refuse to shift outside after completion of the period. The landlord will be able to claim double the monthly rent and four times of monthly rent thereafter as compensation.
2. The landlord will not be able to increase the rent without giving at least three months period to the tenant.
3. In this act, no person will be able to lend or take any rent on any premises except by an agreement or in writing.
4. Within two months of exiting the rental agreement, it will be mandatory for both landlords and tenants to intimate the rent authority about this tenancy agreement. The rent agreement, within 7 days, will issue a unique identification number to both parties[19].
ANALYSIS
After the amendment of acts related to a rental agreement in India. The act which started the concept of rent agreement in India plays a vital role in the tenant-landlord relationship. For the protection and rights of the tenants and landlord, the law should provide them protection as a lawful relationship. In today’s world, every relationship gets exploited anyhow but to protect it, the government should take steps and procedures to protect them and to protect their rights. After reading both the major acts i.e. Rent Control Act and New Model tenancy act, these two act provided that without a written agreement no landlord will rent their house to anybody and the proper legal document should be signed by both the parties because to form a legal document, consent should take place between both the parties, without consent the legal document will not be valid. By analysing both the acts it is understood that the government has taken steps to protect the rent agreement and also to protect this act the tenants and landlords should follow the rules and legislature provided by the government.
CONCLUSION
Rent control laws were introduced in India as a welfare mechanism to allow the requisitioning of houses. As has been illustrated in this paper, however, the regulation of the letting act was a benefit for tenant and landlord as well as it creates an impact on them. Rent Control laws have stood the time of test even though they have not undergone necessary changes from the time they were introduced in the Post world war-II[20]. These laws are primary the competence of the state government and central government. The Rent Control laws were introduced in each state so that the power would remain in the hands of the state government. Through, the amendment of this act there is a line between tenant and landlord, each one of them is at boundaries and no one will cross them. More changes take place in the new act i.e. New Model Tenancy Act, which increases the boundaries between them and create an impact that there is a limitation period in which the tenant will rent the house for 11 months, and if the tenant does not vacate the house after 11 months than the landlord has full authority to double the rent from the tenant.
Hopefully, that sooner the importance of these will be recognized and enough attention should be rendered to them by the legislature and judiciary so as to make the system of rent control a successful mechanism.
REFERENCES
In-Text Citation(s):
[1]: Section 2(h), The Indian Contract Act,1872.
[2]: Section 2(d) Ibid.
[3]: Rent agreement format: Here is a sample for reference. https://timesofindia.indiatimes.com/business/faqs/documents/rent-agreement-format-here-is-a-sample-for-reference/articleshow
[4]: Sumit Pandey, BASIC PREREQUISITES FOR RENT AND LEASE AGREEMENTS IN INDIA. http://www.legalservicesindia.com/article/1812/Basic-Prerequisites-for-Rent-and-Lease-Agreements-in-India.html
[5]: Section 17, The Registration Act 1908.
[6]: Rent Agreement Laws (25th May 2018, 7:57 pm). https://legaldocs.co.in/blog/rent-agreement-laws-in-india
[7]: Kiran Bhardwaj, LANDLORD TENANT ISSUES AND THE MAIN FEATURE OF NEW TENANCY ACT (Sept. 15, 2020). https://www.indialegallive.com/special-story/landlord-tenant-issues-and-the-main-features-of-the-new-tenancy-act/
[8]: Ibid
[9]: Section 94, The Indian Evidence Act,1872.
[10]: See, Supra No. 5.
[11]: RENT CONTROL ACT – RENT AGREEMENT, RIGHTS OF TENANT & LANDLORD (Mar 05, 2020) https://cleartax.in/s/rent-control-act
[12]: Satvik Dev, RENT CONTROL LAWS IN INDIA: A CRITICAL ANALYSIS, Pg No. 13.
[13]: Shraddha Ojha, PROTECTION AGAINST EVICTION AND FIXATION OF FAIR RENT. http://www.legalservicesindia.com/article/510/Protection-against-eviction-and-fixation-of-fair-rent.html
[14]: Ibid
[15]: Article 19, Right to Freedom, The Constitution of India 1949.
[16]: Gursharan Bhalla, Security Deposit, Repairs: How will the new tendency act impact property owners, tenants (Jun 04, 2021). https://www.indiatimes.com/news/india/new-model-tenancy-act-impact-on-property-owners-tenants-541949.html.
[17]: Ibid
[18]: Rent Control Act- Rental Agreement, Rights of Tenant & landlord (Mar 05,2020). https://cleartax.in/s/rent-control-act.
[19]:Sanjeev Sinha, Model Tenancy Act, 2019 : 10 things about tenancy act every landlord and tenant should know (July 16,2019 3:11pm), https://www.financialexpress.com/money/model-tenancy-act-2019-10-things-about-tenancy-act-every-landlord-and-tenant-should-know/1645789/
[20]: Aditya Alok & Pankti Vora, RENT CONTROL IN INDIA: OBSTACLES FOR URBAN REFORM, 4 NUJS L.Rev. 81 (2011) Pg.No. 100.
URL:
(2) https://www.thebetterindia.com/170784/house-rent-laws-rights-tenant-owner-india/.