How Model Tenancy Act impacts affordable housing

Propertypistol

The Model Tenancy Act (MTA) addresses “three problems” with the current rent control system.

As a first step, it seeks to move from a framework of control to regulation. Secondly, it intends to formalize the current rental housing industry by adopting a regulated framework. And third, the Act aims to develop an affordable rental housing stock, taking into account the Affordable Rental Housing Complexes (ARHC) Act.

MTA is likely to be introduced in Parliament soon and will replace the existing Rent Control Order. The MTA does an excellent job on the first two concerns by allowing rent to be determined based on the market and incorporating changes into rental agreements. However, the MTA cannot achieve the third stage without creating a supportive environment to allow formalization and coordination, requiring leases to be in writing and registered online. To accomplish this goal, the current Model Tenancy Act must overcome four challenges. 

The following are some of the challenges the Model Tenancy Act must overcome to provide affordable housing.

  1. There is no single institutional framework The critical problem is that it lacks a clear institutional framework and has overlapping and confusing processes. Moreover, the Rent Authority would record Rental Agreements, and currently, lease agreements can be registered by sub-registrars under the Registration Act. Furthermore, the MTA creates a new regulatory authority and process. As a result, its nomination and monitoring fall under the district administration instead of the local government. Further, the Real Estate Regulation Act, 2016 combines different processes into one single while also creating local authorities for planning and approval.
  2. Unresolved repossession problem The MTA effectively addresses a critical problem with existing state-level rent control legislation: the time-consuming and restrictive procedure of regaining possession of the premises. Furthermore, the eviction process has remained as restrictive as before. Aside from that, if an eviction process is required, it has to be done only under a court’s permission and with specific grounds. Moreover, if homeowners cannot evict tenants legally, they are unlikely to rent out vacant properties. Thus, a speedy, simple process would have enabled the tenant to be appropriately informed, preventing arbitrary or illegal eviction.
  3. Fair market access  Fair market access for tenants is yet another problem that MTA faces. Although digital platforms in local vernacular languages have simplified the registration process, digital media is still not widely used, especially in the informal sector. Additionally, essential documents like AADHAR card and PAN card need to be uploaded, compromising privacy. Moreover, it also faced challenges protecting tenants from all forms of rental discrimination experienced by bachelors, unmarried couples, etc. Therefore, the MTA needs to be revised.
  4. Informal tenants are excluded from MTA Additionally, the MTA provisions are geared toward consideration of formal rental space and exclude informal rentals. As digital platforms may not meet everyone’s registration requirements, they are less likely to gain access to the informal rental market, especially for those with lower incomes. Thus, MTA will impose no penalty for no registration, and all subsequent provisions will only work with registered agreements. These will help the informal rental sector to be excluded from the rental market completely. Hence, it may be beneficial for the MTA to expand its scope and coverage to encompass all types of rental housing.

Thus, these are some of the challenges MTA faces, and if it’s resolved, it will provide a clear example for other states who wish to adopt it. 

Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.

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