• News
  • Columns
  • Interviews
  • BW Communities
  • Events
  • BW TV
  • Subscribe to Print
BW Businessworld

Model Tenancy Law To Boost Pvt Sector To Develop Housing Projs: Industry

The Union Cabinet approved the Model Tenancy Act, a move that will help overhaul the legal framework with respect to rental housing across the country.

Photo Credit :


The Cabinet's decision to approve model tenancy law will encourage private sector to develop housing projects for rent purpose and also bring huge stock of vacant flats in rental market if implemented by states in letter and spirit, according to industry players.

The Union Cabinet approved the Model Tenancy Act, a move that will help overhaul the legal framework with respect to rental housing across the country.

The Act mandates for written agreement for all new tenancies, which will have to be submitted to concerned district 'Rent Authority'.

According to industry estimates, over 11 million homes are estimated to be vacant across the country and experts believe that these flats would now come into the rental market and help reduce housing shortages.

As per the industry experts, the model Act provides three months notice to tenants for hike in rentals and only two months of security deposits for residential properties.

Commenting on the decision, Naredco President Niranjan Hiranandani said: '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 model Act will facilitate unlocking of vacant houses for rental housing purposes, he said.

'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,' Hiranandani said.

Anarock Chairman Anuj Puri said the new 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.

'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,' he said.

Once implemented across states, Puri said 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,' he added.

Knight Frank India CMD said the Model Tenancy Act has provisions to regulate the rights and duties of both the landlord and tenant and this would balance the scale between both these counter parties.

Amit Agarwal, CEO and cofounder of Bengaluru-based NoBroker, said the shift from an informal to a formal market would protect the interests of tenants as well as owners.

'The act caps the security deposit to the value equivalent to two months of rent amount. As per the act a landowner cannot cut power and water supply in case of disputes,' he said.

Agarwal said landlords need to provide a three-month notice to tenants. 'This measure would go a long way in protecting the rights of a tenant as it regulates the rent hikes that tenants have had to face,' he said.

Altaf Ahmad, CBO - Rental Business, Square Yards said it would help transform 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,' he said, adding that this Act would certainly go a long way in cleaning up the rental market.

Ramesh Nair, real estate expert and former CEO JLL India, said the act will help reduce slums and also improve the quality of housing in the country if well implemented.

'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),' Nair said.

Mani Rangarajan, Group COO, &, said 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.

The Model Tenancy Act 2019 proposes to establish a Rent Authority for regulating the renting of premises in an efficient and transparent manner, he said.

Anuranjan Mohnot Managing Director & CEO, Lumos Alternate Investment Advisors, said the implementation of the Model Tenancy Act is one of much required reforms in real estate.

'The legal comfort to landowners about quick redressal to the problem of overstaying tenants as well as protection of tenant rights on arbitrary rent increase etc can bring much required institutional investment in the 'built to rent residential segment' in India,' he added.

Samantak Das, Chief Economist and Head Research & REIS, JLL, said the model Act is going to give a guiding framework to all states to make their respective Tenancy Acts contemporary.

If the states implement the Tenancy Act in true letter and spirit of the Model Act, the rental housing market will be institutionalised, Das said.

Pankaj Bhansali, COO, Eqaro Guarantees Pvt Ltd termed it as a landmark reform that will usher in a new era for the real estate sector in the country.

OwnersTown CEO Abhishek Jindal said welcomed the Model Act, saying it can prove to be a game-changer when it comes to formalization and standardization in rental housing. 


Tags assigned to this article:
housing industry union cabinet Model Tenancy Law