Rent is a payment made by a tenant to a landlord in exchange for the use or habitation of a property. It is necessary for the landlord and tenant to agree on the terms and conditions of the property. The requirements and obligations of both the tenant and the landlord are made legally binding in a rent agreement. The lease is a crucial component of the rental legislation. So, a number of regulations have been passed to regulate the Indian real estate market, and one of such laws is the rental laws. These rules are designed to protect both landlords and tenants' fundamental civil rights while renting out commercial and residential premises.
Objectives of the Act
The Rent Control Act's main goals are to safeguard tenants from excessive rent and arbitrary rent increases as well as to assure their safety. By 1972, each state in India had its own Rent Control Act. Most residential and non-residential properties in all urban areas of the states are subject to the rent control statute. All the states were given a rent control legislation proposal by the federal government in 1992. The model act, which called for a level of rent above rent control, cannot be applied, was a proposal to amend the former laws. The New Delhi Rent Control Act was passed in 1997, but the model act later fell short. Today, standard rent is fixed in each and every state of India. The following are the key clauses of the Rent Control Act:
- Control of Empty Building, including letting and leasing for the tenant's benefit.
- establishing a fair and uniform rent.
- Tenants' protection from arbitrary eviction.
- Landlord obligations and responsibilities, such as upkeep of the rented property.
- Rights of Landlords regarding non-payment, misappropriation, or recovery of Property for Certain Purposes.
The Rent Control Act's applicability
The rent control act does not apply to properties that have been leased to public sector organisations, banks, private limited or public limited firms with a capital share of Rs 1 crore or more, as well as corporations created under state or federal law or foreign agencies.
In the past, significant urban districts having a population of at least 3 lakh would be subject to rent control. But, because of the Bill, the population cap is only a guide, and state governments are free to cover areas as needed, even if their population is even lower than 1 lakh.
When building on an empty lot, only 25% of the work will be deemed a renovation and the remaining 75% will be regarded new construction. The renter would pay the landlord standard rent on the fifteenth year for the new development for the fifteen years. If the Tenant fails to pay this rent, it will be deemed eviction.
15-year exemption or a 7-year minimum vacancy time are both acceptable grounds for exemption.
All lease-exempt tenancies last for a total of 20 years.
Exemption to both residential and non-residential properties with rental values beyond the predetermined range of Rs. 1500 to Rs. 3500.
Important Legal provisions under the Act
Fixation of Rent Standards
The standard rate, which will be fixed at 10%, will be decided by the State Government based on the overall components, including market value for the year, building costs, renovation costs, and significant repairs.
For a specific year, the standard percentage rise is permitted, which varies from state to state. Rates in Delhi were 8% starting in 1970.
Maintenance and amenity fees are added to standard rates.
All leases must now pay the new standard rentals, which are updated every three years based on state government-provided standards.
Tenant and landlord obligations
Tenancy registration must be done formally with the authority that the state government has authorised for landlords.
Landlords are required to provide rent receipts to tenants.
The daily maintenance fixes are the landlords' responsibility.
The property must be returned to its original condition by the tenant.
Penalize landlords and tenants harshly for breaking the rules.
a tenant who hasn't paid rent to a landlord for more than three months.
abuse or unauthorised usage of the location.
After receiving a notice to vacate, the renter failed to deliver possession.
the landlord's legitimate need for self-use as either residential or non-residential.
The number of days a tenant has access to the residence is measured starting on the day it is ready for occupancy.
Any alterations done by the tenant without the owner's consent that result in damage.
A temporary vacation period is offered in the event of significant repairs, construction, or renovations.
Provisions of Maintenance
Maintenance provisions include costs that the tenant is responsible for paying for improved house care and repairs.
The landlord may adjust the rent based on the property's special repairs.
On a special vacation granted for the property's refurbishment, the standard rent will also rise in accordance with the renovation's cost.
creation of a permanent Rent Control Act.
Limiting the length of the lease to five years and allowing for a direct physical eviction of the renter after that time has passed.
An heir who resided with a tenant and was reliant on them. The heir has a year to leave the property after the tenant's passing.
Canteens, sanitation, and other contractual services are not covered by the statute.
Streamlining Legal Judicial Process
By amending Article 323 B of the Indian Constitution to create the Rent Tribunal and encompass tenancy issues.
By making the petition and appeal to the Appellate Tribunal required form available, the legal process is made simpler.
The members of the State Government and the Chairman of the Appellate Tribunal should have all the authority of the High Court.
The State Government has the authority to include disputes and tenancy in the two-tier system's jurisdiction.
Jurisdiction of the Act
The Delhi Rent Control Act, 1958's Section 50 forbids civil courts from having jurisdiction. The First Schedule specifies the boundaries of the New Delhi Municipal Committee, Municipal Corporation of Delhi, and Delhi Cantonment Board, and the Central Government has the authority to enlarge these boundaries. The Delhi Rent Control Act, 1958's actions are handled by the Rent Controller.
The Act cannot be used to any property owned by the government or to any tenancy or other relationship that the government has granted, according to Section 3 of the Act.
The Act is prohibited from asserting or receiving unlawful charges notwithstanding an agreement under Section 5 of the Act.
Consequences of the outdated Rent Act
Due to poor maintenance by landlords, which results in their meagre returns, this law impairs the quality or maintenance of the property.
These regulations restrict the rental market and push away legitimate tenants, compelling them to settle for illegal and unregistered leases.
The Delhi Government has developed a strategy to permit the legislation to raise rent by 25% in 2020 in order to pay the building's owner. The state government can improvise laws because the rules frequently favour tenants. For instance, the Tamil Nadu government has lately proposed ways to balance the laws governing rent control. To address eviction disputes, the administration plans to increase the rental market in this state. Removing rent control helps to unlock the potential of the rental housing sector by boosting property owner confidence by focusing on high rental returns. To have comparable anti-rent control laws removed, petitioners have filed petitions with the high courts of Maharashtra, Tamil Nadu, and Karnataka. Even if some of these appeals have been successful, Delhi may soon pass a stronger tenancy law that will benefit parties, tenants, and landlords.
Satyawati Sharma v. Union of India & Anr. (2008)
It was determined in another case, Satyawati Sharma v. Union of India & Anr. (2008), that Section 14(1)(e) of the 1958 Act violates Article 14 of the Indian Constitution since it makes a distinction between properties rented for residential and non-residential uses. This means that when the landlord gave the tenant the property for his or her commercial purposes and now wants to evict that tenant for his or her residential purposes, he or she cannot exercise that right because the property is now being used for a commercial purpose, which the landlord or landlord's agent allowed.
For the extended duration, tenants must pay rent in accordance with their rental agreement. The Rent Control Act requires the landlord to follow certain steps when setting rent or evicting tenants. The State Government of that state's specified procedure can be used by tenants to submit an application for fair rent. Yet, the rental regulations need to be updated to protect the owner's property from the tenant. Giving the landlord special authority to seize property without going through the courts is one way to do this.
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