DR.

RAM MANOHAR LOHIYA NATIONAL

LAW UNIVERSITY, LUCKNOW

LAND LAW (UTTAR PRADESH)

FINAL DRAFT

TOPIC- RENT LAW IN INDIA WITH SPECIAL EMPHASIS ON

‘FAIR RENT’

SUBMITTED BY: SUBMITTED TO:

VINAY TRIPATHI MS. SHAKUNTLA
SEMESTER IX ASSISTANT PROFESSOR (LAW)
ENROLLMENT NUMBER: 150101160

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 ACKNOWLEDGEMENT

I want to express uncommon much obliged and appreciation to my educator MS.

SHAKUNTLA who gave me chance to finalize this research subject.

This project helped me pick up a major viewpoint about the Project Topic. All through the

exploration period, I have been guided by my educator at whatever point I confronted any

obstacles or was in a state of daze not having the capacity to resolve the intricacies of the subject.

I want to thank my University, Dr. Ram Manohar Lohia National Law University, Lucknow, for

giving me the opportunity to be a part of a novel exploration turned educational program which

without a doubt helps the comprehension of the subject.

I likewise want to thank my guardians, guides and well-wishers who have been a consistent

underpin and have sufficient energy and again looked into my work and have given their

experiences on the matter.

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TABLE OF CONTENTS

ACKNOWLEDGEMENT...............................................................................................................2

INTRODUCTION...........................................................................................................................4

OVERVIEW OF THE RENT LEGISLATION IN INDIA.............................................................5

RENT CONTROL ACT..................................................................................................................7

RIGHTS OF PARTIES....................................................................................................................9

MODEL TENANCY LAW...........................................................................................................11

BIBLIOGRAPHY..........................................................................................................................14

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 INTRODUCTION

A Landlord-Tenant dispute is one area, which has been under scrutiny and debate over many
decades now. The landlord leasing out his property, and the tenant not paying the rent and then
not vacating the premises, makes the matters even worse.
In India, there are two types of agreements that deal with tenancy, namely the Lease Agreement,
and the Leave & License Agreement. The former is covered by rent control laws in which the
amount of rent is arrived at by taking into consideration the cost of construction of property and
the market price of the land. Landlords have to abide by the strict rent laws which apply to these
agreements when they rent accommodation with a 12 month lease. The latter however only
grants the tenant a license to occupy the property for a period shorter than one year, like 11
months, with an option to renew the lease, at the expiration of the said period.
Landlords, therefore, prefer to give out their houses on a Leave & License Agreement, because
the rent control laws, that are favorable to the tenants, only apply for Lease Agreements that are
of at least 12 months. The present practice, which exists, is that the tenant and the landlord sign
an agreement, in which the tenant gets to occupy the property for 11 months, (so that Rent Laws
of 12 months or more do not apply on them) with periodic renewal as an option. Moreover, the
right to ownership of the property gets transferred from the landlords to the tenants in Lease
Agreements, as a result of which tenants are able to refuse to vacate the premises. A Leave &
License Agreement, on the other hand, allows the landlords to take pre-emptive measures for
eviction of the tenants from their property.
The Rental control laws which exist right now prevent the landlords from overcharging the
tenants and protect the tenants from sudden or unfair eviction. Landlords need to show a reason,
legally considered valid if they intend to evict the tenant. Examples of such legally valid reasons
that landlords can avail of are: Need to occupy the premises themselves or for accommodating
their family members (which could include both immediate and distant family members). Other
reasons like, desire to let out the property to someone else for a higher amount of rent, is usually
not considered enough reason to seek eviction of the present tenant.

OVERVIEW OF THE RENT LEGISLATION IN INDIA

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All transactions in Indian real estate sector are governed by various laws enacted by the Central
Government of India and respective State governments. One such law is the RENTAL LAWS.
These laws govern the rental of commercial and residential property and are necessary to enforce
individual civil rights of both landlord and tenant and prevention of any kind of deceit.
The real estate scene in India is flawed by land market distortions. The most glaring ones include
inflexible zoning, rent and tenancy laws. Zoning laws, rent controls and protected tenancies have
been detrimental to the healthy rental trends in India. They have put a freeze to land in city
centers that could be otherwise made available for new retail outlets and flats.
These laws also gloss over operational inefficiencies and scuttle competition. Tenants residing
could not be evicted for a long time and would not surrender their cheap tenancies on their own
volition. The renovation of buildings could hardly happen. One such act favoring the rental
property market in India is the Rent Control Act.

Rental laws in India provide tenants with the security and also landlords their ability to evict
tenants. In general, the main features of rental laws existing in India are:
 Various laws are imposed while one is planning to rent out a property for both
commercial and residential use. Laws are imposed irrespective of the size of the property
being rented to help potential tenants identify and secure good rental accommodation.
 These laws govern the rental rates such that fair rents are being imposed within the
standardized rental ranges that may vary from state to state. A landlord cannot charge its
tenants beyond these rates.
 These laws are also made with the intention to protect the tenants from unfair eviction by
their landlords due to any kind of discrimination.
 Laws also define landlords responsibilities and obligations towards its tenants. This
includes the terms and conditions for maintenance of the property.
 On the other hand, it also defines the rights of the landlord, that he may use in case a
tenant does not fulfill their obligations for paying rent on time or misuse of property in
any manner. This also means the landlord can object to the use of his property d=for
reasons not specified in the agreement.

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However, Rent Control Act cannot be applied to premises that have been let out to banks, public
sector undertakings or any corporation established by or under any state or central act, foreign
missions, multinational companies, and international agencies. For premises let out to private
limited and public limited companies having a paid-up share capital of one crore rupees or more
do not come under the ambit of Rent Control Acts.

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 RENT CONTROL ACT

Rent Control Act was an attempt by the Government of India to eliminate the exploitation of
tenants by landlords. Rent legislation tends to providing payment of fair rent to landlords and
protection of tenants against eviction. But the allowances have been very generous and hence
tenants residing in rental properties in India since 1947 continue to pay rents fixed then,
irrespective of inflation and the realty boom.  
The Rent Control Act has led to several adverse situations like languishing investment in rental
housing, withdrawing of existing housing stock from the rental market, stagnating municipal
property tax revenue.  The rent control along with security of tenure has not given any
encouragement to house owners to renovation their houses and most houses as a result have a
worn out look.
Repeal of the Rent Control Act would lead to construction boom and meet the growing need for
housing and aid employment generation. There will be more rational use of prime locations and
will set off a continuous process of urban renewal.
In 1992, the Central Government proposed a model rent control legislation, which was meant for
and circulated to all states. The model Act proposed modification of some of the existing
provisions on   inheritance of tenancy and also prescribed a rent level beyond which rent control
could not apply.  The New Delhi Rent Control Act that was passed in 1997 was based on this but
failed to be notified due to resistance from traders who are sitting tenants. Very few states have
introduced the model Act.
The new Maharashtra Rent Control Act, Delhi Rent Control Act, Tamil Nadu Rent Control Act,
Karnataka Rent Control Act all has provisions for the dispute among the landlords and tenants. 
Each of the State Rent Act provides for fixation of Standard Rent as well decree for possession
and provisions that lay down the satisfaction of the Court.

IMPACT OF RENT CONTROL ACTS:

There is a near unanimous opinion that the social objectives of rent control acts have not been
realized. On the other hand there have been various adverse effects. The most significant impact
is on the supply of rental housing which is influenced by the Act in three different ways:-

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a) The negative effect on investment in new rental housing and supply from the existing stock of
housing. This is not only due to low rents but also due to the fear of losing the house to the tenant
altogether.

b) Withdrawal of supply from existing rental housing stock. Even though evicting the tenant is
very difficult, as and when the landlord recovers the premises the disincentive to re-let the
premises is quite high. The large number of vacancies is an evidence of the same.

c) Accelerated depreciation due to inadequate maintenance. Under the controlled regime, the
rents continue to remain at a low level whereas the cost of maintenance continues to increase.
The situation is more severe in case of old tenancies where the rents have been frozen at
historical low levels. It is in case of these old properties that the need for maintenance is higher.
The older housing stock in our urban areas thus faces premature decay and degradation. These
are also the areas with highest productivity of land. The economic cost of premature death of
these properties as also of their low productive use is quite high.

The rent controls have led to stagnation of revenue from property taxes since the base of property
tax is Standard Rent which has been frozen under most Acts.
The frozen rents have led to emergence of practices like key money. Thus, apart from creating a
black market in rental housing, the Act has reduced the accessibility of low income groups to
rental housing, as they cannot afford to pay large deposits to rented premises.
The widening divergence between the interests of landlords and tenants has not only led to
increased litigation under rent control Acts (the rent control cases make for a majority of cases in
courts) but also to increased crimes. A large number of criminal cases have their origin in
disputes over rented properties.

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 RIGHTS OF PARTIES

RIGHTS OF LANDLORD UNDER THE ACT

 Evicting a Tenant – Under the Rent Control Act, the landlord has the right to evict the
tenant. The states have individual byelaws. In Punjab and Haryana, a landlord can evict
the tenant on the basis of a personal, bonafide requirement, whereas the same does not
happen in the Karnataka byelaws. But playing by ordinary rationale, courts allow for the
eviction of the tenants on the landlord’s request, keeping into consideration facts and
circumstances. The Draft Model Tenancy Act, 2015 shall make matters easier for the
landlords.
 Temporary Recovery of Possession – In order to make all the necessary repairs,
alterations and changes in the property, a landlord has a right to recover temporary
possession of the same.
 Rent Changes – The Draft Model Tenancy Act is an instrumental legislation. Rent
changes are something that usually occurs in accordance with the whims and fancies of
the landlord. The rent cannot be unreasonably high or increased suddenly, however, the
upper hand remains of the landlord and he can periodically increase the rent of the
property.

RIGHTS OF TENANT UNDER THE ACT

 Fair Rent – A landlord cannot unjustifiably increase the rent, however, he can approach
the Rent Control Court in order to fix a rent. The rent has to be fair which is usually
supposed to be 9% of the value of the building in totality including the cost of
construction, the market value of land and amenities being provided.
The landlord also does not possess the right to disconnect essential services of electricity
and water even due to rental reasons. They can approach the court, however, cannot
deprive you of your basic supplies and amenities.
 Eviction – In order to evict a tenant the landlord is required to approach the court and
cannot unjustifiably evict the tenant. Byelaws play a major role in such a scenario. The
Maharashtra byelaws are such that do not allow for the eviction of the tenant if the tenant

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 is willing to acquiesce and agree to the changes in rent and is willing to pay the same. A
notice is also to be given ninety days prior to filing a suit.

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 MODEL TENANCY LAW

The announcement of the Union Budget 2019-2020 (Budget) by the Finance Minister, Ms.
Nirmala Sitharaman, introduced a few changes in the periphery of the real estate sector. On July
10, 2019, the housing ministry put a policy in the public domain for suggestions, which could act
as the model act for States and Union Territories to regulate this segment. The Model Tenancy
Act, 2019 (Model Act), takes forward what was proposed in the Draft Model Tenancy Act, 2015.
The objective of the Model Act is to, inter alia, bring within its ambit the rules for residential
and non-residential premises and further develop the policies to promote balanced rental housing
by developing different options like individual units, dormitories, hostels, co-living, co-housing,
paying guest and employee housing, and outline the roles of various stakeholders in ensuring
housing for all.

The Model Act has two notable changes that will have a positive impact on the renting segment:
the first, is the setting up of a rent authority, to bring transparency, fix accountability and
promote fairness; and the second is speedy dispute resolution, wherein timelines have been
provided in the policy, to avoid a long-drawn-out process, presently taken under the civil courts
for reaching a verdict on disputes between landowners and tenants.

Some of the key highlights of Model Act that need to be taken note of are as below:

 It is now mandatory for parties to present the rent authority with a copy of the tenancy
agreement within two months from the date of agreement.

 After this, a unique identification number (UIN) will be provided to the parties and the
details of the tenancy agreement will be uploaded to the rent authority website. All
information provided in the tenancy agreement will be taken as evidence of facts relating to
tenancy and connected matters.

 A cap of two months rent has been fixed for payment of security deposit for residential
properties and a minimum of one month’s rent for non-residential properties.

 Provision for escalation of rent is to be quantified in the tenancy agreement, in absence of

which any increase in rent during the subsistence of the tenancy period will not be taken into
consideration.

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 In absence of any provision for escalation in the tenancy agreement, the landowner may
revise the rent by giving three months prior written notice to the tenant and where the tenant
fails to give a notice for termination of the tenancy, the tenant shall be deemed to have
accepted the increase in rent.

 If any additional structural alterations or improvements (not including necessary repairs)

are undertaken, the landowner may increase the rent one month after completion of such
work, by an amount as agreed between the parties.

 If the landowner refuses to accept the rent or other charges payable or give a receipt in
respect thereof, the rent and other charges can be sent by postal money order consecutively
for two months. Further, if the landowner does not accept the rent within this period as
envisaged above, then the tenant may deposit the same with the rent authority.

 No tenants are permitted to sublet (whole or part) of the premises without prior written
consent of the landowner. Such subletting or assignment, whether directly or indirectly,
cannot be for a rent that is higher than the rent charged by the landowner to the tenant.

 The landowner, tenant or property manager cannot withhold any essential supplies (being
supply of water, electricity, gas, lights in passages, lifts, staircase, conservancy, parking,
communication links and sanitary services etc.) in relation to the premises occupied by the
tenant.

 The landowner is entitled to compensation of double the monthly rent for two months and
four times of the monthly rent thereafter, for non-vacancy of the premises by the tenant who
does not vacate the premises after his/her tenancy has been terminated by order, notice or as
per the agreement.

 The tenant may give up possession of the premises after giving such notice as required
under the tenancy agreement. In the absence of any such provision, the tenant shall give at
least one month notice before giving up possession.

 A grievance mechanism will be set up, which will include the rent authority, rent courts
and rent tribunals.

The grievance redressal mechanism is provided to make people aware that there are dispute
resolution forums set up to prevent any unfairness against the tenant and landowners. According

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to the economic survey of 2017-18, there was a steep increase in the number of vacant homes in
the past few years. This is attributable to the rising prices of properties, which in turn is affecting
the leasing market and landowners not getting adequate returns from renting homes.

The Model Act is aimed at strengthening the rental laws and providing the landowner a reason to
not fear letting out their houses vide leasing. The Model Act offers to make rental laws
transparent and provide an assurance to tenants and landowners that there will be mutual, fair
and balanced relationship. And, where disputes arise, there will be repercussions and redressal
mechanisms to safeguard the same, boosting their confidence in the market.

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 BIBLIOGRAPHY

 Pro-tenant laws in India often inhibit rental market, Global Property Guide, available

at: http://www.globalpropertyguide.com/Asia/India/Landlord-and-Tenant

 Rental Agreements, Leases and Regulations in India, AngloInfo, available

at: http://india.angloinfo.com/housing/renting-accommodation/rental-agreements/

 https://legaldocs.co.in/blog/rent-agreement-laws-in-india

 https://www.business-standard.com/article/pf/good-for-tenants-and-owners-model-

tenancy-act-takes-checks-most-boxes-119080301054_1.html

 http://www.legalservicesindia.com/article/510/Protection-against-eviction-and-fixation-

of-fair-rent.html

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