Table of Contents
- Standard rent under Maharashtra Rent Control Act
- How much increase in rent is allowed under the Rent Control Act?
- Registration of the rent agreement
- Conditions on usage of rental property
- Is it compulsory for the landlord to give a rent receipt?
- Transfer of tenancy under the Rent Control Act
- Employee-employer tenancy
- Upkeep of the rented premises
- Conditions for repairs / reconstruction of rental house
- Supply of essential services
- Inspection of premises by the landlord
- Eviction of tenant under the Rent Control Act
- Dispute resolution
- How the newly approved Model Tenancy Act impacts Maharashtra’s rent law?
To regulate rental housing, the Maharashtra state government passed the Maharashtra Rent Control Bill, 1999, and the Maharashtra Rent Control Act, 1999, came into effect on March 31, 2000. The Act aims ‘to unify and consolidate’ rental housing in the state and ‘for encouraging the construction of new houses by assuring a fair return on investment (RoI) by landlords’. After coming into effect, the Act replaced the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, the Hyderabad Houses (Rent, Eviction and Lease) Control Act, 1954 and the Central Provinces and Berar Regulation of Letting of Accommodation Act, 1946.
Standard rent under Maharashtra Rent Control Act
In areas where the rules of the Act are applicable, charging rent in excess of the standard rent is illegal. Such an offence is punishable with imprisonment not exceeding three months, or fine not exceeding Rs 5,000, or both.
How much increase in rent is allowed under the Rent Control Act?
Landlords are entitled to make an increase of 4% per annum in the rent of the premises that has been let out for any purpose. Rents can also be increased, if repairs or alterations have been made in the rented accommodation, to improve its condition. However, the hike in the latter scenario should not exceed 15% per annum of the expenses incurred on account of special additions.
The landlord is also within his right to hike the annual rent, if he is required to pay increased government-imposed taxes. In this case, the increase in rent should not exceed the amount of the increased tax.
Who is a tenant under the Act?
A tenant is defined as a person by whom or on whose account rent is payable for any premises.
The definition also includes:
- A deemed tenant.
- A person who is a sub-tenant.
- A person who has derived title under a tenant.
- A person to whom interest in the premises has been assigned or transferred.
Registration of the rent agreement
The landlord and the tenant should register the rent agreement. ‘Any agreement for leave and licence or letting of any premises, entered into between the landlord and the tenant or the licensee, as the case may be, after the commencement of this Act, shall be in writing and shall be registered under the Registration Act, 1908,’ says the Act. The responsibility of getting such an agreement registered is on the landlord. Failure to do so is punishable with an imprisonment, which may extend to three months, or a fine not exceeding Rs 5,000, or both.
Conditions on usage of rental property
Landlords cannot use their residential properties for commercial purposes. They also cannot allow their tenants to do so. For any breach of this rule, the landlord may be punished with an imprisonment for a term of up to six months, or a fine of up to Rs 10,000, or both.
Is it compulsory for the landlord to give a rent receipt?
Landlords have to mandatorily provide rent receipts to the tenants. Failure to do so, may result in a fine which may extend to Rs 100 for each day of default.
Transfer of tenancy under the Rent Control Act
Section 56 of the Rent Control Act mentions that it is legal for a tenant to accept money, in lieu of giving up their tenancy rights. It is also legal for a landlord to accept money for the grant or renewal of a lease of any premises, or for giving his consent to transfer the lease to any other person.
According to the Act, a landlord can rent his property to his employee. The tenancy will remain effective during the period of service or employment of the tenant with the landlord.
‘Where any landlord intends to let any premises or any part thereof belonging to him, to his employee, such landlord and the employee may enter into an agreement in writing, to create a service tenancy in respect of the said premises or any part thereof; and notwithstanding anything contained in this Act, the tenancy so created shall remain in force during the period of service or employment of the tenant with the landlord,’ says the Act.
Within 30 days of the services coming to an end, the employee is liable to vacate the premises of his employer under this arrangement.
Upkeep of the rented premises
The law specifies that the duty to keep premises in good condition, lies on the landlord. If the landlord does not make any repairs within a reasonable time, after a notice of 15 days is served upon him, the tenant may carry out the same and deduct the expenses of such repairs from the rent. However, the amount deducted against the rent or recoverable in any year, cannot exceed one-fourth of the rent payable by the tenant for that year.
Conditions for repairs / reconstruction of rental house
Landlords who want to engage in reconstruction or repairs have to fulfill several conditions. Apart from the fact that they should have enough funds to carry out the renovation/reconstruction/repairs, they should also have all the approvals from the local authorities in place, to go ahead with the work. While planning the reconstruction, the landlords should ensure that the units in the new structure should not be less than the units in the old structure. The same is true with respect to the carpet area of the structure. If the entire structure has to be demolished to rebuild the structure, this work must be completed within three months of the tenant vacating the place. The construction work should then be completed within 15 months after this period.
Supply of essential services
The Rent Control Act states that landlords cannot cut off the supply of essential services, such as water supply, electricity, lights in passages and on staircases, elevators, conservancy or sanitary services, etc., to the tenants. If the landlord were to do so, the court may punish him with imprisonment for a term of up to three months, or a fine of up to Rs 1,000, or both.
Inspection of premises by the landlord
The landlord is entitled to inspect the premises ‘at a reasonable time, after giving prior notice to the tenant’, says the Act.
Eviction of tenant under the Rent Control Act
A landlord is not entitled to take back possession of any premises, as long as the tenant pays or is ready and willing to pay. Moreover, the landlord cannot file a suit for recovery for the rented premises on the grounds of non-payment of rent, until the expiry of 90 days. The 90-day period would start 15 days after the landlord has served a notice to the tenant in this regard, as provided under Section 106 of the Transfer of Property Act, 1882.
The landlord will be entitled to take back possession of any premises, if the court is satisfied that:
* The tenant has committed any act that is contrary to the provisions of Section 108 of the Transfer of Property Act, 1882.
* The tenant has erected any permanent structure on the premises, without the landlord’s written consent.
* The tenant has given his notice to quit the premises and consequently, the landlord has contracted to sell the premises or let it out to another party.
* The tenant is guilty of nuisance or annoyance to the adjoining or neighbouring occupier, or is convicted of using the premises for illegal or immoral activities.
* The tenant is guilty of unlawful sub-letting of the apartment.
* The tenant has ceased to be in the employment of the landlord, based on which the rented accommodation was provided.
* The tenant has been convicted of an offence in respect of the premises, by not abiding by the provisions under:
- Section 394 and Section 394A of the Mumbai Municipal Corporation Act.
- Section 376 and Section 376A of the Bombay Provincial Municipal Corporations Act, 1949.
- Section 229 of the City of Nagpur Municipal Corporation Act, 1948.
- Section 280 and Section 281 of the Maharashtra Municipal Councils, Nagar Panchayats and Industrial Townships Act, 1965.
* The premises are reasonably and bona fide required for occupation by the landlord himself. This is also true for carrying out of repairs, which are not possible without the premises being vacated and demolished. If a tenant fails to comply with the order of eviction within 30 days of the date on which it has become final, a competent authority may evict them using such force as may be necessary.
The Court of Small Causes and the court of the Civil Judge, have jurisdiction over rent dispute cases. While cases shall be heard and disposed of as expeditiously as possible by the courts, says the Act, adding that ‘Endeavour shall be made to dispose of the case within a period of 12 months from the date of service of summons’.
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How the newly approved Model Tenancy Act impacts Maharashtra’s rent law?
After the union cabinet, on June 2, 2021, approved the Model Tenancy Act (MTA) and issued guidelines to states, to either introduce a rental law on similar lines or to make chances in existing laws to make it MTA-compliant, there is growing concern about what will happen to the existing state law that favour tenants greatly.
If the provisions of the central act are replicated and amendments are made in the Maharashtra Rent Control Act, rents of a large number of properties, especially in Mumbai’s chawls, could increase exponentially across the state and make the eviction of such tenants much easier.
Across Maharashtra, over 6,00,000 families live in more than 30,000 old and dilapidated buildings and chawls that fall under the purview of the Rent Control Act. While the rents of these establishments were earlier frozen at the rates prevalent in the 1940s, the Maharashtra Rent Control Act, 1999, said landlords could hike rents by 4% per annum. In spite of this, rents in these buildings are extremely low, as compared to the market value of these properties.
However, since it is only a model law, provisions of the central act may be diluted in states, something that we have seen in the case of the real estate act (RERA). Legally speaking, in the case of a model act, uniformity of provisions is a desirable objective of the law but not its principal objective. A model law serves more in the capacity of a guide for the states than anything else.
“The success and operational efficiency of the Model Tenancy Act would majorly depend on its implementation across states and union territories. The apprehension that the MTA may end up being powerful, yet ineffective, comes from the fact that the Act is not binding on states, as land and urban development remain state subjects,” said Anshuman Magazine, chairman and CEO, India, south-east Asia, middle east and Africa, CBRE.
The Maharashtra state government has already said it would not implement any provisions of the model law that deal with hike in rentals or eviction of existing tenants. “We will thoroughly study the model law and adopt only those points, which are for the benefit of citizens. Anything dealing with hike in rentals or eviction of existing tenants, will not find a place in our law,” Maharashtra housing minister Jitendra Awhad said, after the MTA was approved by the union cabinet on June 2, 2021.
Earlier, taking a pro-tenant stance, the Shiv Sena opposed the MTA and wrote to chief minister Uddhav Thackeray, urging him not to implement the central act. “In Mumbai and other cities in Maharashtra, many houses are vacant and so there is no point in introducing a new rent control law. There is no need for a new fare control law for Mumbai. The Bombay Rent Act and the Maharashtra Rent Control Act are competent and adequate for this. In any law made for tenants, they would be protected, because the landlord has unlimited control over his land and is ready to grab the land by expelling the tenant. Therefore, the Rent Act should be a tenant’s charge. In contrast, the centre’s law is the opposite,” the party said in its letter.
Is Maharashtra Rent Control Act valid after the Model Tenancy Act?
The provisions of the Maharashtra Rent Control Act remain valid across the state, even though the centre has launched the Model Tenancy Act. This is because the latter Act is model in nature and states do not have any binding duty to implement it.
When did the Maharashtra Rent Control Act come in force?
The Maharashtra Rent Control Act, 1999, came into force on March 31, 2000.
How much rent increase is legal in India?
Under normal circumstances, landlords can increase the rent of premises that have been let out by 4% per annum, under the Maharashtra Rent Control Act.