Rented property, tenancy: India
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Rent Control Act: History
From the archives of The Times of India 2007, 2009
LOW RETURNS
Delhi Rent Control Act, 1958 came into force in 1959 to check rent escalation and eviction of tenants in certain parts of Delhi, including places like Connaught Place, Chandni Chowk, Karol Bagh and South Extension
The Act is applicable to properties rented below Rs 3,500 per month These properties, worth crores in prime areas, fetch negligible returns, rents being as low as Rs 50 to Rs 150 In 1988, a provision to increase rents by 10% every three years was included in the Act In 1995, Delhi Rent Act was brought in to repeal the earlier law but was never notified due to resistance from traders and tenants In 1997, Delhi Rent (Amendment) Bill was referred to a Parliamentary Standing Committee. Though it submitted its proposals, which were accepted by the government, nothing happened A Supreme Court ruling last April relaxed norms for owners. It ruled that a tenant can be evicted if his landlord proves he needs the property for personal use Though the SC ruling is heavily tilted in favour of owners, they are still sceptical and not ready for another round of legal battles. But others have heaved a sigh of relief and finally hope to get back their properties
ZERO PROGRESS
1958 | Government brings Delhi Rent Control Act to protect tenants from arbitrary increase in rents
Makes eviction of tenants next to impossible. Tenants paying up to Rs 3,500 protected
1988 | Act amended to introduce 10% increase on base rental every 3 years
1995 | Major overhaul in law gives landlords more power to increase rent of property Outlines formula for rationalization of prevailing rental; links increase to inflation
The act was never notified after protests by tenants’ bodies despite assent from president
2013 | UD ministry decides to repeal 1995 act No clarity on focus of proposed alternative or deadline:
Rent regulation, state-wise position
Assam ‘first state’ to set up rent regulation authority
Prabin Kalita, Aug 14, 2021: The Times of India
Assam has promulgated a tenancy Act to establish a rent authority to regulate renting of premises, which will be market-driven and determined by a mutual agreement between tenants and landlords to protect the interests of both.
Officials here said Assam is the first state in the country to do so.
The new law has been formulated on the basis of a Model Tenancy Act which was approved by the Union cabinet on June 2 this year for adoption across all states and Union territories.
The bill was introduced in the assembly on August 9 and was passed on Friday. The earlier Assam Urban Areas Rent Control Act, 1972, stands repealed.
The Act will provide quick adjudication of resolution of disputes between landlords and tenants through the establishment of a rent authority, a rent court and rent appellate at the district level. It also specifies the duties and obligations of landlords and tenants regarding maintenance and upkeep of premises. There will be no artificial cap in fixing the rent of a premises.
“Various contentious issues arise between a landlord and a tenant. Some do not respect agreements when it comes to leaving the premises. After this Act comes into force, the letting-out process will become easier,” said Assam’s housing and urban affairs minister Ashok Singhal.
Delhi Rent Control Act
2006: Govt. considers, then shelves an alternate law
Stillborn rent act headed for burial
Owners worried, no clarity yet on focus of new law
Abhinav Garg & Dipak Kumar Dash TNN
The Times of India 2013/07/06
New Delhi: After 18 years in the mortuary, a politically sensitive property act is being given a quiet burial in the run-up to the Delhi assembly elections. The Centre’s move to repeal the amended Delhi Rent Act of 1995 has shattered the hopes of thousands of landlords who have properties in prime commercial areas such as Connaught Place, Karol Bagh, Paharganj and the Walled City.
Although the urban development(UD) ministry plans to introduce a fresh law, there is no clarity on its focus, intent and timeframe for introduction. The proposal to repeal the 1995 act was on the cabinet agenda last Wednesday but was withdrawn. It will be placed before the cabinet again soon, sources say.
The 1995 act would have replaced the archaic law of 1958 that protected the migrant population from arbitrary rent hikes by wealthy landlords. Although it served tenants well, the law became a tool to harass landlords over the next four decades. Even as property values skyrocketed, landlords bound by rent control rules continued to get paltry rents. The 1995 act was passed by both houses of parliament and received presidential assent, but after street protestsby tenantsthe government lost the will to notify it.
Sources said a proposal to repeal the 1995 law-in-waiting was moved aroundsix months ago after urban development minister Kamal Nath asked his officials to start work on a fresh law. “Until we withdraw the existing act, we can’t officially undertake the fresh task. Once the consultation process starts we can come to know what the shape of the new law will be,” said a ministry official.
Landlords are angry and say the government is delaying justice to appease the electorally significant tenant constituency. They term the 1958 act “unconstitutional” and have been fighting a casein the high court since 2010.
The UD ministry, which is supposed to push other states to undertake rent control law reform, is itself moving in the opposite direction, says Sobha Aggarwal, president, Committee for the Repeal of Delhi Rent Control Act. “Instead of notifying the Delhi Rent Act (DRC), 1995, which was passed by parliament, the government is repealing it. Since the implementing agency is itself violating the policy, it is not surprising that hardly any state has undertaken rent control law reform.” She alleges that the tenant-trader lobby in Delhi has compelled the government to “subvert” the policy, reform process and subsequent court orders.
In the absence of any legislation to remedy the situation, the courts led by the Supreme Courthave providedsomesuccor. They have allowed landlords to invoke “need” to get even commercial properties vacated. The DRC act remains the last defence available to tenants.
Property owners point out the1958 acthas no mechanism to bring the historical rent to the present market rate and gives a tenant the luxury to pay less than Rs 3,500 per month in perpetuity. The law clearly states that all those paying less than this amount will be protected. An amendment in 1988, though, allowed landlords to increase rent by 10% every three years. In effect, Aggarwal says, a tenant who was paying Rs 10 as rent in 1988 would hit the Rs 3,500 ceiling after 184 years. Even somebody paying Rs 1,000 in 1988 would cross the mark in 2027.
Rent Control Act, Delhi
2019: HC dismisses challenge to rent act’s ceiling
Abhinav Garg, HC won’t lift cap on rent, junks plea, January 8, 2019: The Times of India
Landlords’ Body Wanted 1958 Rent Control Law Revoked
Hopes of property owners saddled with prime land paying paltry rentals in the capital were dashed on Monday when Delhi high court dismissed their plea challenging the city’s rent act ceiling.
A bench of Justices S Ravindra Bhat and A K Chawla declined the plea of an association of landlords to set aside the Delhi Rent Control Act, 1958 as “unconstitutional” and left it to the legislature to take a call if the cap imposed on rentals under DRC Act needs a relook.
The judgment, whose detailed copy with reasons is awaited, came on petitions filed in 2010 challenging the Act.
Introduced over five decades ago, the Delhi Rent Control Act puts a ceiling on maximum rent that could be charged by landlords and has been criticised by land owners for its failure to align rentals with prevailing market rates. The Act protects those paying less than Rs 3,500 per month as rent, which can’t be increased beyond this ceiling.
Property owners, including advocate Shobha Aggarwal, had argued that despite owning huge buildings in prime areas like Connaught Place, Karol Bagh, Paharganj and the Walled City, they draw a pittance as rent, while the tenants prefer to contest lengthy eviction proceedings.
The petitioners claimed that the DRC Act is ultra vires the Constitution as it discriminates against landlords and violates Article 14, 19(1)(g) and 21 of the Constitution. The last big change in the Act occurred in 1995 when the government brought in an amendment that was never notified, in effect killing the change.
In her plea, Aggarwal had argued that half the properties covered under the archaic law fetch a monthly rent less than even the daily minimum wage of unskilled worker earning as low as Rs 353 per day. The petitioners had highlighted that even as property values skyrocketed, landlords were forced into poverty because they could neither evict tenants nor increase the rent and instead had to pay higher property tax to the corporations as the latter revised the taxes.
The advocate had also sought a direction to the government to compensate landlords for their economic losses, and emotional and psychological trauma suffered by them because of the Act.
But the Centre, through standing counsel Akshay Makhija, had opposed the PIL’s arguing that all these issues have been considered by various courts, including the Supreme Court, earlier and were dismissed. The government also maintained that there is no data cited by the landlords to substantiate their claim that the DRC Act has become archaic.
Property owners, including advocate Shobha Aggarwal, had argued that despite owning huge buildings in prime areas, they draw a pittance as rent while the tenants prefer to contest lengthy eviction proceedings
A commentary on the judgement and the background
Old properties, acquired or inherited for next to nothing by today’s standards, should have proved a handy income source for their owners today. To the contrary, the rents from these have remained absurdly low, and Delhi high court dismissed the petitions challenging the cap on rental under the Delhi Rent Control (DRC) Act, 1958. Affected property owners can now only hope for a more favourable decision from the Supreme Court, where they will next take their fight.
The DRC Act, mindful that high rents would prove a burden for poor tenants in the post-Independence period, barred property owners from charging a monthly rent higher than Rs 3,500. Properties getting a rent of above Rs 3,500 are excluded from the Act, but petitioner and lawyer Shobha Aggarwal had argued that the Act offered no mechanism to bring the historical rent of the old to current market levels, or even to Rs 3,500.
Today, a large number of buildings in Connaught Place, the Walled City, Karol Bagh and even Lutyens’ Delhi remain covered by the DRC Act, getting for their owners paltry sums every month.
While declining the plea, the high court noted while it is true that several tenants do not deserve protection through a beneficial legislation, the fact was that “the housing situation is far from ideal even today”. It said the landlords’ need to occupy or make
a living off rents “cannot outweigh all other considerations which underlie the objective of DRC Act. Those objectives, i.e. protection of a section (which apparently continues to be a large section of the population) from the depredations of unscrupulous landlords, still has relevance. Without the protection of rent legislation, the weakest section of the society to whom the DRC Act still has relevance, may well face a daily threat of eviction.”
The court put the onus for any future course correction of aligning rentals with market rates on the legislature. However, the property owners remain skeptical of the political executive bringing any change in the law, given their track record of rental legislating in the capital.
After the first few decades, as Delhi’s real estate market
began climbing up, there was a clamour for amending the 1958 Act. However, it was not until 1988 that the Union urban development ministry relented and exempted properties fetching rentals above Rs 3,500 per month from the Act. In 1995, bowing to incessant demands, the central government decided to repeal the old law and enact a new one that prescribed a more realistic rental cap. This new law, despite being approved by Parliament, was, however, never notified.
Since then the sporadic attempts at changing the DRC Act have not sustained. For example, the UPA government in 2013 introduced the Delhi Rent (Repeal) Bill, 2013, but it didn’t even take off after the successor NDA regime brought in the Model Tenancy Bill in 2015. This envisages mutual fixing and revising of rent between the landlord and tenant, unlocking the existing properties which can be rented out and faster adjudication. But more than three years later, the Bill is still at the draft stage.
An aggrieved Aggarwal says, “It needs to be pointed out that the entire ruling class has continued to indulge in masterly inactivity on the issue since 1995, when the Delhi Rent Act, 1995 (which repealed the 1958 law) was passed unanimously by Parliament, but which the executive failed to enforce due to pressure from the powerful tenant-trader lobby of Delhi’s old markets. Vote bank politics takes precedence over Parliament representing the will of people of India.”
The Delhi Rent Control Act of 1958, mindful that high rents would prove a burden for poor tenants in the post-Independence period, barred property owners from charging a monthly rent higher than ₹3,500
Compensation/ rehabilitation for demolished shops
Equating tenants with landlord is wrong
REHAB SCHEME - Owners & tenants treated alike, N corp gets HC rap, April 9, 2017: The Times of India
Terming it an illegal act, the Delhi high court has quashed a municipal corporation's rehabilitation scheme under which it failed to differentiate between tenants and owners while granting compensation for demolition of shops.
HC wondered how the north corporation could put tenants of demolished shops at par with the owners by giving both of them 50% share in the relocated land.
Justice Indermeet Kaur observed in her recent order that converting a tenant's status to that of a landlord is against all the statutes dealing with such a relationship, and “all principles of equity , fair play and natural justice.“ HC's comments came while setting aside a resolution of the north corporation by which it devised the rehabilitation scheme to give alternative land to the owners and tenants of 121 shops at Azad Market in north Delhi.
The shops, which were leased out on a perpetual lease for 99 years, were demolished in 2009 for a road-widen ing project. Only nine of the 121 shops were occupied by tenants and the owners of four such shops had challenged the rehabilitation scheme of 2014. Allowing the plea of the owners, the court said, “By way of this resolution a man who was owning one complete piece of land had suddenly been reduced in his ownership to a status of 50%. By the present resolution, the corporation has taken away all the rights of the petitioners.“
“The petitioners who were the owners... have suddenly been reduced to a half ownership status. This was no fault on their part. This resolution, if allowed to be implemented, would cause a grave prejudice. It would be a serious detriment to the rights of such petitioners,“ the court added. It noted that the corporation had taken the same decision in 2009 when it had come out with a rehabilitation scheme subsequent to the demolition, but the high court had in 2012 set it aside and asked the civic body to consider it afresh.
Rent not paid
SC orders eviction
The Supreme Court has come to the rescue of a man from Vadodara fighting to regain possession of a shop he had rented out in 1958 for a monthly rent of Rs 30. Anil Kumar Dhekle had to fight a legal battle for nearly 40 years: he first moved court in 1978 after the tenant defaulted on payment from 1974 to 1976.
The Supreme Court has directed the tenant to hand over possession of the shop in Vadodara within two months.Although the apex court sympathised with the shopowner for fighting such a protracted legal battle to get his property back, the court itself took 10 years to decide on his plea.
“It is unfortunate that the appellant-landlord is litiga ting for more than four decades to get back possession of his own premises and, therefore, the respondent-tenants are directed to hand over vacant possession of the premises immediately ,“ a bench of Justices Kurian Joseph and R Banumathi said. Dhekle received rent regularly till 1974 and after the tenant failed to pay till 1976, the landlord approached court, which passed an order in Dhekle's favour in 1981. But the district court set it aside in 1983. Thereafter, Dhekle approached the Gujarat high court the same year, which in 2003 upheld the district court's order and allowed the tenant to hold possession by paying monthly rent.
Granting him relief, the SC said, “The findings and the reasonings recorded by the high court are not based on evidence and cannot be sustained. As rightly held by the trial court, the tenants are liable to be evicted...The respondent or other person(s) are directed to hand over vacant possession within two months.“
Tenancy Act, Model
2021
Prabhakar Sinha, June 16, 2021: The Times of India
NEW DELHI: Our cities have an acute housing shortage though there are more than 1 crore homes that could be leased out but are lying vacant all over India. It’s this big housing paradox that the Model Tenancy Act, approved earlier this month by the Union Cabinet, aims to end.
But how?
Among the Act’s most important stipulations is to bring the entire process of renting a house under a dedicated adjudicator – the Rent Authority – and assure a house owner of a time-bound settlement in case of a dispute with a tenant.
So many million houses lie unused because of renting hesitancy, which skews the real estate market heavily by squeezing the supply line and creating an artificial shortage. This eventually translates into higher rents for a tenant, blowing up into a bubble.
The rent bubble is a reality in all big Indian cities, forcing millions of people to look for cheaper houses in the suburbs. Tenant disputes are as much a reality. At present, if a tenant encroaches on a house and refuses to move, the process of seeking legal redress is long and costly.
This is where the Model Tenancy Act makes important changes. Other than a Rent Authority, it also requires any state that notifies the law to set up a Rent Court and a Rent Tribunal. Appeals included, the law assures dispute settlement in five to six months. The states have to enact their own legislations or amend existing laws based on the central law because housing is a state subject. The central Act mandates that the Rent Authority and Rent Court have to be headed by officers of the rank of deputy collector. The Rent Tribunal will be headed by a district judge or an additional district judge.
Real estate experts feel speedy dispute redress and transparency the law brings in by bringing it under legal oversight from the point a landlord and a tenant sign an agreement will go a long way in reducing hesitancy and consequently unlock many houses lying unused. How fast that happens, however, will depend from state to state and how soon they legislate or revise their laws to bring in the new tenancy regime.
The law also safeguards tenants from whimsical charging of security deposits – laying down a maximum period of two months – and unannounced visits by the landlord. The Act says a landlord has to give a tenant a 24-hour notice before visiting the premises.
Some of the key clauses in the Model Tenancy Act are as follows: a. Once an agreement is signed, the landlord and the tenant have to jointly or separately inform the Rent Authority about its execution. The filing process is likely to have a digital window on the Rent Authority’s website
b. The agreement will be assigned a unique identification number by the Rent Authority
c. The agreement must contain details of rents, terms of increment and all other terms and conditions
d. If the period of rent is to be extended beyond what the first agreement stipulates, a new agreement will have to be signed, which will have to be registered afresh with the Rent Authority
e. The advance security deposit a tenant has to pay cannot exceed two months’ rent for residential premises. The tenant has to be given a refund on the date the landlord takes over possession
f. The tenant has to pay rent on the due date mentioned in the agreement, and the property owner has to provide a receipt
g. The tenant is responsible for general maintenance of the premise while safety and upkeep of the permanent structure are obligations of the landlord
h. A landlord or property manager can enter the property after 24 hours of giving the tenant notice while a tenant can vacate the premises after giving a notice as is required in the agreement. If there is no such clause in the contract, the tenant can giving a month’s notice
i. An overstaying tenant has to pay double the monthly rent for the first two months of stay beyond the agreement’s stipulation and four times the rent after that
j. In case a tenant refuses to vacate, the landlord can approach the Rent Authority with a complaint
k. If the tenant refuses to accept the Rent Authority’s order, the landlord can move the Rent Court. The tenant can also appeal against the Rent Authority’s order in the Rent Court
l. The Rent Court has to give its verdict within 60 days of receiving the complaint. The landlord or tenant can move the Rent Tribunal next, which will have another 60 days to decide
m. The Rent Authority has to get the final order implemented within 30 days
n. The Model Tenancy Act will be applicable from the day a state enact it. But if an existing tenant sublets a premises after the law is implemented, the landlord can file a case under the Model Tenancy Act.
Renting as a business model
Samantak Das, chief economist and head of research at Jones Lang LaSalle, said, “If states and Union Territories implement the Model Tenancy Act in true letter and spirit, it will help bring transparency in the rental housing market and enable it to inch towards institutionalisation.” Bharat Bhushan Sharma, a senior advocate and partner at J Sagar Associates, said the implementation of the Act by states would be challenging because the new laws seeks a full revamp of the legal framework for rental properties in India, along the lines of the Real Estate Regulation (and Development) Act, or Rera, as it is known in common parlance.
Anuj Puri, chairman of Anarock property consultants, said the Act would also help bridge trust deficit between tenants and landlords by clearly delineating their obligations. Leading industry players said the new law would allow real estate companies to look at renting as a serious business model. Niranjan Hiranandani, national president of real estate body Naredco, told TOI, “The Model Tenancy Act is expected to give a fillip to private participation in rental housing as a business model to address the huge housing shortage.”
Besides, in the backdrop of recent central government guidelines on Affordable Rental Housing Complexes, the Model Tenancy Act will help attract institutional players like pension and sovereign funds eyeing the large but untapped residential market of the country, felt Anurag Mathur, CEO of global consultancy firm Savills in India.
Shishir Baijal, chairman and managing director at Knight Frank India, said, “Laws relating to Rera, REIT, GST and now tenancy will help the property sector become more transparent, and consumer-focused – and thereby, attract the world’s best institutional investors and developers.
Tenants’ rights
Are limited; Cannot dictate redevelopment
Swati Deshpande, April 10, 2023: The Times of India
MUMBAI: The Bombay high court has ruled that tenants have limited rights and cannot dictate the nature of redevelopment to the owner. In the case of a Khar (West) building, where an "obstinate tenant" (HC's words) was holding up redevelopment, the court directed the BMC to issue a commencement certificate for redevelopment. The owner, G M Heights, a limited liability partnership firm, had petitioned the HC.
"Tenancy rights cannot be stretched to such an extent that the course of redevelopment can be taken over by the tenants, so as to take away the basic corporeal rights of the owner of the property, to undertake redevelopment of the owner's choice," said a bench of Justices Girish Kulkarni and R N Laddha. The judgment is expected to pave the way for future redevelopment projects, according to a counsel.
The building in question, originally known as Rami Raja Chawl, had 21 tenants and was demolished in August 2021 after being declared dilapidated. The owner proposed a commercial structure, which a lone tenant, represented by counsel D K Jain, said was legally impermissible.
Senior counsel GS Godbole, for the owner, stated that the BMC had accepted the proposal, and barring one, the other 20 tenants had no objection to a commercial building in the redevelopment plan. The tenant refused to give an NOC and did not sign the Permanent Alternate Accommodation Agreement. BMC's condition in 2021 was that the nod for actual construction or commencement certificate was to be issued only after all tenants gave consent. The owner challenged the BMC's conditions in its petition, arguing that they were arbitrary and unconstitutional.
The HC ruled that the tenants could not impose on the owner to redevelop the building in the same manner it originally stood, and that the owner had the right to undertake redevelopment of the manner and type they intended. The only rights of the tenants were to be provided with an alternative accommodation of an equivalent area occupied by them before the building was demolished. The tenant's counsel was unable to show "any embargo on the owner of the land, to undertake redevelopment, different from the nature of the existing building which has stood demolished", said the HC, which had recently clarified that BMC cannot, under its guidelines, demand 100% consent in cases of a dangerous building and consent of 50-70% tenants would suffice.
The owner in the case under consideration offered the tenants accommodation on tenancy in the commercial building, which the "obstinate tenant" did not accept, and as a last resort, monetary compensation was also offered. "The approach of the (tenant) is most unreasonable and adamant to say the least," observed the HC. The court also noted that there was an existing eviction dispute pending before the small causes court, and the outcome of the dispute would impact the offer of alternative accommodation to the tenant.
Cannot dictate to landlord on property’s use
Landlord can’t be dictated on property’s use, says HC
TIMES NEWS NETWORK
New Delhi : A tenant cannot dictate to the landlord how the property should be utilised, Delhi High Court has said, allowing a plea by one such landlord seeking eviction of the tenant.
“Landlords cannot be deprived of the beneficial enjoyment of their property. Further, the court is not to sit on the armchair of landlords to dictate as to how the property should be utilised. It is the sole discretion of the landlords to get all the tenanted premises vacated and used as per their need,” Justice Jasmeet Singh noted in a recent order.
HC passed the order while dismissing a tenant’s plea challenging a trial court's order for eviction of a shop at Shyama Prasad Mukherjee Marg.
The landlord said he and his son are joint owners of the property, where several shops have been given on rent, and he has been running a hotel on the same premises on the first floor and above.
He contended that his son, who has completed his education, wishes to run an independent business, and has decided to start a restaurant for which they require the tenanted portions back.
The tenant, in his plea, said the landlord in the eviction petition did not disclose the exact area under possession and the space is occupied by 14 tenants.
He claimed the eviction petition was nothing but an afterthought as property prices and rent in the area have risen astronomically and it was filed to extract higher rent from him or to sell the tenanted premises at a premium.
However, HC said there was no material to show that the need of the landlords was either malafide or fanciful and dismissed the revision petition. The court noted that the material placed on the record showed that the tenanted premises was genuinely required for running a restaurant.
